[amarie1126]

We have a request for a 12-month DLOC to build a commercial shop on their land and secure it by their home. Since my bank does modifications to take their loans out to permanent financing instead of creating separate permanent financing (I know, not a great idea), would we file hmda on this transaction now as a refi instead since it would not fall under temporary financing and is being secured by their home (and paying off previous loan secured by the home)?

[jholzknecht]

This appears to be a business purpose loan, a commercial shop. Section 1003.3(c)(10) excludes from reporting, “A closed-end mortgage loan or open-end line of credit that is or will be made primarily for a business or commercial purpose, unless the closed-end mortgage loan or open-end line of credit is a home improvement loan under § 1003.2(i), a home purchase loan under § 1003.2(j), or a refinancing under § 1003.2(p).” Your loan is not for home purchase, home improvement and not for refinancing, at least at the present time. After the 12 month term if the line was refinanced, then reporting would be required. Apparently your intent is to modify, rather than refi, at the end of the term, so, the line would not be reportable in that event.

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