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We have a customer that took out a 6 month loan to purchase a home to flip. Now 6 months later the home has not sold and we are refinancing this loan. Would this refinance loan be subject to HMDA?
The refinance would be covered under HMDA.
The initial 6-month loan likely would have been excluded under the temporary financing exemption; however, the refinance could not. The definition of temporary financing is a loan or line of credit designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time. The 6-month loan fits this definition.
The new new loan fits the definition of a refinance – closed-end mortgage loan or 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.
Unless I am missing something in the question, it looks like the original loan was a reportable transaction since it was to be satisfied with proceeds from the sale of the house and not permanent financing.
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