[HMDA Guy 78]

I have a situation where a borrower owns a home free-and-clear. He paid $150,000 for the home initially. The value of the home has increased significantly, and we are able to do – at his request – a loan for $180,000. The purpose of the loan is to rehab the house. Thus it is a “home improvement loan.”

The term of the loan is 12 months. He intends to sell his prior home (not the one he is rehabbing), and payoff this rehab loan with the proceeds of the sale of the other home.

However, if the prior home is not sold within the 12 month term, we will convert this to a long-term financing and most likely sell on the secondary market.

I am leaning towards “YES” for the question “is this HMDA-reportable” – but I am hesitant, because there is the off chance that his home does not sell and long-term financing will ensue.

Any thoughts or advice? Thank you for your help!

[rcooper]

This sounds like a short term loan, not temporary financing, so it would be HMDA reportable.

[HMDA Guy 78]

I would agree, Robin – my concern is … if the borrower doesn’t sell his other home, and we have to refinance the loan into long-term financing, is there an issue in us reporting HMDA twice on it? Because in that case it would be a refinance for Reg C / HMDA purposes.

[jholzknecht]

It is OK to report a loan twice. When you refinance a home purchase loan you report the loan twice. Here you have a reportable home improvement loan that is later refinanced.

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