A brother deeds property to his sister. The parents have a loan with the property as collateral. After the sister was deeded the property she gets a loan against it for future construction. Part of the proceeds of her loan pays off the parents loan. Since she was not signed on the parents loan I wouldn't consider her new loan a refinance. She already owned the property at application so it wasn't a purchase. Does HMDA apply at all?

When you say she took out a loan for "future construction," do you mean she is making improvements to the house? If so, I would say it is reportable as a home improvement loan.

Well I will assume the property you are referring to is currently real estate only, and the sister has borrowed money against the property to construct a dwelling on that property. Again I am assuming this. If that is a correct assumption then depending on your loan terms you either have a construction loan, or you have a home purchase loan.

No. She is actually using some of the proceeds to buy a modular home on a different piece of property. This new home is not part of the collateral on this loan.

The property already has a dwelling on it.

If she is purchasing a dwelling, and the loan is secured by a dwelling, then it is reportable as a purchase. Unless, as Dan assumed the loan is secured by just bare land.

And looking at #12 response is another good example why questions should be precise and not left to the assumption of the responder. If #12's assumption is the correct one, then I agree with that response.

The property she is buying or the property she is using as security?


Look at the definition of a home purchase loan in Reg. C.

If your new loan is secured by a dwelling and it is to purchase a dwelling then the loan is a reportable home purchase loan. And you report the property securing the loan on the LAR.

Sorry for any confusion. Her new loan is secured by a dwelling and the proceeds were used to payoff her parents' loan on that dwelling and will be a downpayment on a modular home on a different piece of property. So it sounds like it meets the definition of a purchase since part of the proceeds of the dwelling secured loan will be used as a downpayment for a modular home construction. Thank you both for your help.

Whew...we finally got there...you are correct. Unless your loan is a bridge loan. If it's a temporary bridge loan then it would not be reportable.

Remember, that HMDA is purpose driven, not collateral driven. Part of the proceeds are being used to purchase a home, therefore the loan is HMDA reportable.

HMDA is also collateral driven. Loan proceeds to purchase a dwelling that is not secured by a dwelling is not reportable, the same for a refinancing if it's not secured by a dwelling and the loan being refinanced is not secured by a dwelling and in the case of a closed-end HI loan it is reportable regardless how you classify it if it is secured by a dwelling. All of course assuming the loans don't qualify for one of the allowable exemptions.