HMDA Refinancing - Defined

Answered by:

Question:

According to "A Guide to HMDA Reporting Getting It Right!" effective 1/1/04, the definition of a reportable refinancing is "any dwelling-secured loan that replaces and satisfied another dwelling-secured loan to the same borrower. Please define "satisfies and replaces". Does this require cancellation of the current loan promissory note and recording of a satisfaction of lien for the current security instrument/mortgage consequently being replaced by a new note and execution of new lien/mortgage, or does cancellation of existing note followed by a new note qualify as a "refinance" (the existing lien instrument/mortgage stays intact)?

Answer:

Satisfies & replaces refers to extinguishing the existing note and replacing it with a new one. The security instrument does not have to satisfied and replaced.

First published on BankersOnline.com 5/16/05