[TheBank]

In 2018 we originated a construction loan to build apartments and sold a total of 90% of the loan to several institutions. In 2020 we refinanced the construction loan to permanent financing. The participation agreements from 2018 remain in effect. Am I correct to include the 2020 loan as HMDA reportable? Would the HMDA field “Type of Purchaser” be 0-NA since the participation was sold in 2018 and not 2020?

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[jholzknecht]

The term “refinance” means a closed-end mortgage loan or an open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower. It appears that the 2018 construction was not HMDA reportable since it was temporary financing. The 2020 loan appears to be HMDA reportable as a purchase loan. You indicate that the 2018 participation agreements remain in effect, most likely through language that explains the agreement covers extensions, renewals, and refinancings. Since participations in the 2020 loan were sold to several institutions in 2020 you should enter the type of purchaser, as follows.

Paragraph 4(a)(11)- 1. states, “A financial institution that originates a covered loan, and then sells it to more than one entity, reports the “type of purchaser” based on the entity purchasing the greatest interest, if any. For purposes of § 1003.4(a)(11), if a financial institution sells some interest or interests in a covered loan but retains a majority interest in that loan, it does not report the sale.”

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