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Modular houses. Is a modular house a manufactured home for purposes of Regulation C?
Response: For Regulation C reporting, a manufactured house is just the one that satisfies the HUD rule, 12 CFR 203.2(i). The formal staff commentary shows that modular domiciles which can be ready for occupancy if they leave the factory and fulfill every one of the HUD rule requirements are contained in the concept of “manufactured home”. 203.2(i)-1. The remark, and a previous FAQ on this website, have actually raised questions regarding whether a modular house should always be reported as being a manufactured home or as a single- to four-family dwelling. A modular home as either a one- to four-family dwelling or as a manufactured home until the Board provides further guidance regarding modular homes, lenders may, at their option, report.
This FAQ supersedes the previous FAQ on modular domiciles published in December 2003.
Conditional loan-commitment that is approvals—customary loan-closing conditions. The commentary shows that an organization states a “denial” if an organization approves that loan susceptible to underwriting conditions (apart from customary loan-commitment or loan-closing conditions) as well as the applicant doesn’t fulfill them. See remark 4(a)(8)-4. What exactly are customary loan-commitment or loan-closing conditions?
Answer: Customary loan-commitment or loan-closing conditions include clear-title needs, appropriate home study, appropriate name insurance binder, clear termite assessment, and, in which the applicant intends to make use of the arises from the purchase of just one house purchasing another, funds declaration showing sufficient arises from the purchase. See feedback 2(b)-3 and 4(a)(8)-4. A job candidate’s failure to meet up with among those conditions, or a condition that is analogous causes the application form to be coded “approved not accepted. ” Customary loan-commitment and loan-closing conditions try not to include (1) conditions that constitute a counter-offer, such as for instance a need for a greater down-payment; (2) underwriting conditions in regards to the debtor’s creditworthiness, including satisfactory debt-to-income and loan-to-value ratios; or (3) verification or verification, in whatever kind the financial institution ordinarily calls for, that the debtor satisfies underwriting conditions borrower creditworthiness that is concerning.
Conditional approvals—failure to fulfill creditworthiness conditions. Exactly exactly exactly How should a loan provider rule “action taken” where in fact the debtor will not satisfy conditions creditworthiness that is concerning?
Response: in cases where a credit choice will not be made in addition to debtor has expressly withdrawn, utilize the rule for “application withdrawn. ” That rule just isn’t otherwise available. See Appendix The, I.B.1.d. In the event that condition involves submitting extra information about creditworthiness the financial institution has to produce a credit choice plus the applicant hasn’t taken care of immediately a demand when it comes to more information into the time permitted, use the code for “file closed for incompleteness. ” See Appendix the, I.B.1.e. The lender calls for for a credit choice and also the loan provider denies the applying or runs a counter-offer that the debtor will not accept, utilize the rule for “application rejected. In the event that debtor has provided the details” Then make use of the rule for “application approved although not accepted. In the event that debtor has pleased the underwriting conditions associated with loan provider while the loan provider agrees to give credit however the loan just isn’t consummated, “
For instance, then the program must certanly be coded “file closed for incompleteness. If approval is conditioned on a reasonable assessment and, despite notice for the requirement for an assessment, the applicant decreases to have an assessment or will not answer the lending company’s notice, ” If, having said that, the applicant obtains an assessment however the assessment doesn’t offer the thought loan-to-value ratio in addition to loan provider is consequently perhaps not ready to expand the mortgage amount desired, then a lender must make use of the rule for “application denied. ”
Refinancing — coverage vs. Reporting. Why are there any two definitions of “refinancing, ” one for “coverage” and another for “reporting”?
Response: a loan provider makes use of the reporting definition, 203.2(k)(2), to ascertain whether or not to report a certain application, origination, or purchase as a “refinancing” into the loan function industry; a loan provider makes use of the protection definition, 203.2(k)(1), to find out if the organization has adequate house purchase loan task, including refinancings of house purchase loans, for the organization become included in HMDA. See 203.2(e)(1)(iii), 203.2(e)(2)(i) and (iii). The protection meaning just isn’t strongly related determining whether or not to report a specific deal as being a refinancing.
Refinancing — loan purpose. If an obligation satisfies and replaces another responsibility, could be the intent behind the changed responsibility strongly related whether or not the brand new responsibility is a reportable “refinancing” under Regulation C?
Response: No. The latest concept of a refinancing that is reportable simply to whether (1) an obligation satisfies and replaces another responsibility and (2) each responsibility is guaranteed by way of a dwelling. See 203.2(k)(2). Therefore, as an example, a satisfaction and replacement of that loan created for a company function is really a refinancing money tree that is reportable both the newest loan plus the replaced loan are guaranteed by a dwelling.
Refinancing — type of credit. If your dwelling-secured type of credit satisfies and replaces another dwelling-secured responsibility, could be the line needed to be reported being a “refinancing”?
Answer: No. A dwelling-secured personal credit line that satisfies and replaces another obligation that is dwelling-secured not necessary to be reported as a “refinancing, ” no matter whether the line is for customer or business purposes.
Refinancing — guaranty secured by dwelling. If an responsibility guaranteed with a dwelling is pleased and changed by an responsibility for which a guaranty regarding the credit obligation is guaranteed with a dwelling however the brand new credit responsibility is maybe not secured with a dwelling, is the transaction reportable under HMDA?
Response: No, a deal just isn’t reportable as being a true house purchase loan or refinancing unless the credit responsibility, it self, is guaranteed by way of a dwelling. See 203.2(h), 203.2(k)(2). A responsibility maybe perhaps not guaranteed with a dwelling is reportable as a true do it yourself loan only when categorized by the loan provider as a house enhancement loan. See 203.2(g)(2).
Refinancing — satisfaction of lien. May be the satisfaction of a lien (mortgage) strongly related determining whether a responsibility is a reportable refinancing?
Response: No, the satisfaction of the lien is neither necessary nor enough to generate a reportable refinancing. The credit responsibility must certanly be replaced and satisfied; it’s not appropriate if the lien is pleased and changed. See 203.2(k)(2)
Refinancing — cash down for do it yourself. Just just exactly How should a loan provider code a loan that is dwelling-secured the debtor utilizes the funds both to pay back a current dwelling-secured loan also to fix a dwelling?
Response: a loan that is dwelling-secured satisfies the definitions of both “home enhancement loan” and “refinancing” should really be coded as a “home enhancement loan. “See comment 203.2(g)-5. The lending company must code the mortgage as a “home enhancement loan” regardless if the lending company will not classify it within the loan provider’s own documents as being a “home enhancement loan. ” See 203.2(g)(1).
MECAs. Should MECAs (Modification, Extension and Consolidation Agreements) be reported under HMDA as refinancings?
Response: No. The guideline is unchanged: MECAs aren’t reportable as refinancings under Regulation C. See 67 Fed. Reg. 7221, 7227 (Feb. 15, 2002). The comment that is applicable unintentionally omitted as soon as the Commentary had been revised in 2002; the remark will undoubtedly be restored once the Commentary is next revised.
Temporary Financing. Whenever is that loan “temporary financing” so that it is exempt from reporting?
Response: The regulation listings as samples of short-term funding construction loans and connection loans. See 203.4(d)(3). Construction and connection loans are illustrative, perhaps perhaps maybe not exclusive, samples of temporary financing. The examples suggest that funding is short-term when it is made to be changed by permanent funding of the much long run. That loan just isn’t financing that is temporary because its term is quick. As an example, a loan provider can make a loan with a term that is 1-year allow an investor to acquire a house, renovate it, and re-sell it ahead of the term expires. Such financing should be reported being house purchase loan. See 203.2(h).
Reverse Mortgage—reporting. Does a loan provider need to report all about applications and loans reverse that is involving?
Answer: Reverse mortgages are at the mercy of the basic guideline that loan providers must report applications or loans that meet up with the concept of a property purchase loan, do it yourself loan, or refinancing ( see 12 C.F.R. § 203.2(g)-(h), (k)).
Note, but, that reporting is optional in the event that reverse mortgage (in addition to qualifying as a true house purchase loan, home improvement loan, or refinancing) can also be a house equity line of credit (HELOC). See 12 C.F.R. § 203.4(c)(3). The staff that is official to Regulation C states that the loan provider whom opts to report a HELOC should report into the loan quantity industry just the portion of the line designed for do it yourself or house purchase. See remark 4(a)(7)-3.
Program—In basic. A component associated with concept of “preapproval demand” could be the presence of the “program. ” Just How could it be determined whether a scheduled system exists?
Solution: A preapproval system exists once the procedures used and established because of the loan provider match those specified in 203.2(b)(2). A course, aside from its title, isn’t a “preapproval system” for purposes of HMDA in the event that program will not meet up with the specs when you look at the legislation. By the exact same token, an application might be a preapproval system for purposes of HMDA although it is certainly not therefore known as. The real question is perhaps the loan provider frequently makes use of the procedures specified into the legislation. Those requests need not be treated as requests for preapproval under HMDA if a lender has not established procedures like those specified in the regulation, but considers requests for preapproval on an ad hoc basis. Failure to determine and consistently follow consistent procedures, nonetheless, may raise fair-lending and safety-and-soundness problems.
Program—Commitment letter issued on demand. If a lender problems a consignment page just during the applicant’s demand, does the lending company have preapproval system?
Response: If a loan provider will since a broad matter problem written commitments beneath the terms and procedures described in 203.2(b)(2), then a loan provider includes a preapproval system irrespective perhaps the loan provider provides written dedication to all candidates whom be eligible for preapproval or simply to those qualifying candidates who especially request a consignment on paper.
Preapproval demand accepted and approved, but loan not originated. Just exactly How should a loan provider report a preapproval demand this has authorized where in fact the debtor afterwards identified a house into the loan provider but that loan wasn’t originated?