Are Home Equity Loans HMDA-Reportable?

Your charter (OCC) has nothing to do with HMDA. HMDA applies to applications for:

1. Home purchase loans:
A) A loan secured by a dwelling and made for the purpose of purchasing a dwelling (can be secured by different dwellings).

2. Home improvement loans:
A) A loan secured by a dwelling in which the proceeds are used to repair, rehabilitate, remodel or improve a dwelling or the real property on which it is located; and
B) A non-dwelling-secured (or unsecured) loan in which the proceeds are used to repair, rehabilitate, remodel or improve a dwelling or the real property on which it is located, and which is classified by the bank as a home improvement loan.

[Examples of improvements to the real property include installing a pool, construction of a garage or landscaping.]

3. Refinancings:
A new obligation that satisfies and replaces an existing obligation by the same borrower where both the existing obligation and the new obligation are secured by liens on a dwelling, regardless of the purpose of the existing obligation.

Next, let me define "dwelling" from Regulation C and its commentary: "Dwelling" means a residential structure (whether or not attached to real property) located in a state of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico. The term includes an individual condominium unit, cooperative unit or mobile or manufactured home. [Section 203.2(d)]

The definition of “dwelling” is not limited to the principal or other residence of the applicant or borrower and thus includes vacation or second homes and rental properties. A dwelling also includes a multifamily structure such as an apartment building. Recreational vehicles such as boats and campers are not dwellings for purposes of HMDA. [Commentary to Section 203.2(d) #1 & #2]

A home equity loan can be used to purchase another dwelling and/or for home improvement purposes and can be refinanced. So, yes, a home equity loan can be subject to HMDA.

A home equity loan to purchase a car, pay off credit cards or other purposes not mentioned above is not subject to HMDA. However, if the home equity loan is refinanced, it may become subject to HMDA.

First published on BankersOnline.com 1/17/05