We are performing an audit of our credit union’s compliance with HMDA and looking for some guidance on a particular reporting situation. We are auditing 2017 HMDA LAR data that was reported in 2018, so only loans that were subject to the old HMDA rules prior to the 2018 changes.
Are closed-end second mortgages that are classified as refinances HMDA-reportable?
Our mortgage staff said that in 2017, we were only required to report home equity closed-end loans that were for home improvement, withdrawn, or denied. Debt consolidations, getting cash out, and refinances would not be reported.
In our research, we have not been able to find specific basis on if refinanced second mortgage have to be reported or not. Reg. C and the 2013 FFIEC Guide to HMDA Reporting do not distinguish between first and second mortgages… just that refinances are to be reported. They define a refinancing as “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.” The only resource we could find that distinguishes between first and second mortgages is from an NCUA webinar.
The following question and answer is from the NCUA Fair Lending and HMDA Compliance Webinar on February 20, 2015 - Questions and Answers)
26. If a closed end second mortgage is done as part of a TDR (troubled debt restructure) then is it be included on HMDA report?
The mortgage would only be reported if it “satisfies and replaces” an existing obligation secured by a first lien on a dwelling. 12 CFR §1003.2(Refinance)
I appreciate any guidance you are able to give us.
Thanks,
Dan
