[TheBank]

Is a closed end business loan secured by a dwelling that was already owned by the borrower with no outstanding debt HMDA reportable when the purpose of the loan was “cash out equity in existing investment property to purchase another one.” The property to be purchased was not known at the time of loan origination.

[rcooper]

What you describes sounds like it would be a covered loan based on the following:

1. General. Section 1003.3(c)(10) provides a special rule for reporting a closed-end mortgage loan or an open-end line of credit that is or will be made primarily for a business or commercial purpose. If an institution determines that a closed-end mortgage loan or an open-end line of credit primarily is for a business or commercial purpose, then the loan or line of credit is a covered loan only if it is a home improvement loan under § 1003.2(i), a home purchase loan under § 1003.2(j), or a refinancing under § 1003.2(p) and no other exclusion applies. Section 1003.3(c)(10) does not categorically exclude all business- or commercial-purpose loans and lines of credit from coverage.

2(j) Home Purchase Loan
1. Multiple properties. A home purchase loan includes a closed-end mortgage loan or an open-end line of credit secured by one dwelling and used to purchase another dwelling. For example, if a person obtains a home-equity loan or a reverse mortgage secured by dwelling A to purchase dwelling B, the home-equity loan or the reverse mortgage is a home purchase loan under § 1003.2(j).

Let us know if you have other questions. Thanks!

[Author]

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