[Mary Beth Devillier]

I have a loan in a LLC entity name borrowing funds to reimburse purchase and renovation of 1-4 family investment property to pay line of credit to zero. This loan is secured with 1-4 family investment property and the line of credit we are paying to zero (not closing) was secured with 1-4 family investment property in the same LLC entity name. I’m just trying to make sure of my HMDA purpose as purchase, due to the hierarchy of reporting purposes for business loans. Am I thinking of this correctly?

Topic

[Kimberly Boatwright, CAMS, CRCM]

Purchase is only used if any of the funds will be used to purchase a property. If I’m understanding your scenario, the purchase was already completed, it sounds that you have a refinance and not a purchase.

NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.

THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE

[Mary Beth Devillier]

Good Morning, I just want to make sure that the above scenario is considered a refinance even though the previous loan (line of credit) is not being closed but is being paid to zero.

[Kimberly Boatwright, CAMS, CRCM]

Based on the scenario you have outlined in the first question you do not have a purchase. If what you are indicating is that the funds are being refinanced into a new loan it sounds as if you have a refinance as written into the original question.

NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.

THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE

[Mary Beth Devillier]

I hate to keep harping on this situation, but, after speaking with the Officer, this customer utilizes a line of credit (secured by a 1-4 dwelling) to purchase and/or renovate investment 1-4 family dwellings. She then will mortgage the new property to reimburse (pay down the line of credit) as she completes them. In some cases, she might overlap her timing, meaning, she will pull money on line for new project and we are in the middle of funding a past purchase so the line doesn’t go to zero at this time, but the debt used for the particular property is satisfied. Again, should be reported Refinancing each time of new loan?

[Kimberly Boatwright, CAMS, CRCM]

If it is the same loan and a Line of Credit it would only be reported the first time. It is not reported every time the borrower draws from the LOC. IF the borrower is mortgaging a finished property and creating a new loan obligation for that dwelling then that new loan would be reported as a new transaction, that transaction would be treated separately from the original LOC obligation.

[Author]

Replies