[cjernigan1211]

Good morning. We are considering rolling out a new product in the next few months and I wanted to get some feed back concerning HMDA. This is a 12 month consumer note, that can not be renewed, refinanced, or extended at maturity. At maturity, the note will either be paid off or placed on principal and interest payments. This product will be secured by either the individual’s principal or second home. The note is a draw line of credit for home improvement purposes. While all this leads me to believe this is a HMDA reportable loan, language in our deed of trust indicates this loan is for “temporary financing purposes only” which plants a seed of doubt. I don’t believe this constitutes the temporary financing discussed in the regulation which I believe concerns construction notes. My other question is, at maturity, if the note is not paid off, will each succeding note be a reportable refinance? Again, I think this so, but I would really like to get a second opinion. Thanks for your help. Have a good day.

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[Anonymous]

This sounds like a HELOC to me. I’d first find out if that’s something your institution reports. We don’t, therefore this wouldn’t be a reportable loan. We don’t even offer these types of products.

I researched a little bit on BOL (shhh, don’t tell anyone) and here is a link with an answer. HMDA’s GIR really didn’t specifically say anything about the definition of what temp financing is.

https://www.bankersonline.com/compliance/guru2008/gurus_comp022508c.html

Also you had asked about reporting each succeeding refinance? Yes. I would, but I’d check to see if this would be a modification/extension first because that can get a little iffy as to reportability.

[cjernigan1211]

No this is not a HELOC. We already offer this product which, for us, has different characteristics. Our bank does not report HELOCs on the LAR. For purposes of reporting this home improvement Note on the LAR, would it help clarify the temporary financing definition if language on the Deed of Trust and Note both indicated this product was for temporarY financing and can not be renewed, refinanced, or modified in any way.

[jholzknecht]

Is this product an open-end line of credit? If so the loan appears to be a HELOC, and HMDA reporting is optional. If it is a closed-end credit extension with draws it appears to be a short-term home improvement loan, which is reportable.

[Author]

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