[mcarey]

If we have a couple getting a divorce and one spouse is going to buy out the other’s interest in the house (and the party buying is not living in the house but is on the current loan) is this a refi or a purchase?

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[rcooper]

Because of this discussion (see below) in the premable on p. 676 I believe it would be a refinance (assuming it meets that definition).

A GSE requested that the Bureau clarify that in order for a loan to be considered a
purchase loan, none of the borrowers can currently hold an ownership interest in the property. The commenter noted that such a clarification would align the meaning of purchase for the disclosure required by § 1026.37(a)(9) with current industry standards. The Bureau believes that the general understanding of a “purchase” loan is one where the consumer does not already hold an interest in the property. Further, the Bureau believes that the proposed regulatory text is sufficient to convey such meaning, because it states that the disclosure applies to the “acquisition” of the property, and one cannot acquire what one already owns. Accordingly, the Bureau is adopting § 1026.37(a)(9)(i) as proposed and comment 38(a)(9)-1.i substantially as proposed with minor modifications for clarity.

[Author]

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