GMI on a HELOC - Home Purchase or Refinance

Question:

I have read the following statement under Reg B staff interpretations of 202.13 (#5) "an application for open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling". To me that means that if an applicant applies for a HELOC with the intention of purchasing or refinancing their home that we (the lender) should gather government monitoring information. Am I understanding correctly? If I am, what is the creditor supposed to be doing with the GMI? For HMDA we report the GMI on the HMDA LAR, but there is not a Reg B LAR to my knowledge.

Answer:

You are correct that there is no such thing as a Reg B LAR. However, if your financial institution reports HELOCs, with a stated purpose of purchasing or improving a dwelling, on its HMDA LAR (this is optional), you would use the obtained GMI for that purpose. Page 8 of the current "Getting It Right" states: "Home equity lines of credit (HELOCs) for home purchase or improvement may be reported at the institution’s option. Report only the amount that is intended for home purchase or home improvement purposes. An institution that reports home equity credit line originations must also report any applications that do not result in an origination."

First published on BankersOnline.com 7/14/08