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We have a loan that seems to be HMDA reportable, it’s a rental property dwelling purchase and also for improvements to the dwelling for 1 year with the intention of selling the property. Even though it is a term of just 1 year, because it is not going to be replaced with financing of a longer term, it is my understanding that it would be HMDA reportable. Where my question comes in, is regarding the loan being structured as a draw down line of credit in order to do construction and inspections. The construction is not from the ground up, it is to make substantial improvements, so the funds will be disbursed over time and inspections done, and as the line is drawn, funds can only be drawn once, it does not revolve, even if funds are repaid, which I believe would meet the definition of closed-end. Is this loan HMDA reportable?
From the information you’ve provided, it sounds like a purchase with home improvement which would be HMDA reportable. It is a short-term loan, not temporary financing.
From page D-8 of “A Guide to HMDA Reporting: Getting it Right”: Purpose—multiple-purpose loan. If a loan is a home purchase loan as well as a home improvement loan, or a refinancing, an institution reports the loan as a home purchase loan. If a loan is a home improvement loan as well as a refinancing, an institution reports the loan as a home improvement loan.
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