Some of our home mortgage customers “refinance” their loans and use some of the proceeds to improve their current residence or purchase a different property. Our loan document specifically states that the transaction “does not satisfy and release” the original loan note. Are these transactions reportable under HMDA?

No, we do not believe that these transactions are reportable under the Home Mortgage Disclosure Act (HMDA) and Regulation C, because they are not “extensions of credit.”

The HMDA and Regulation C require your bank to report closed-end and open-end extensions of credit. The official interpretations in Regulation C clarify that a modification, renewal, extension, or amendment that does not satisfy and replace an existing loan is not reportable because it is not an extension of credit.

For resources related to our guidance, please see:

  • Regulation C, 12 CFR 1003.4(a) (“A financial institution shall collect data regarding . . . covered loans that it originates . . . .”)

  • Regulation C, 12 CFR 1003.2(e) (“Covered loan means a closed-end mortgage loan or an open-end line of credit that is not an excluded transaction under §1003.3(c).”)

  • Regulation C, 12 CFR 1003.2(d) (“Closed-end mortgage loan means an extension of credit that is secured by a lien on a dwelling and that is not an open-end line of credit under paragraph (o) of this section.”)

  • Official Interpretations, Regulation C, Paragraph 2(d), Comment 2 (“ . . . In general, extension of credit under § 1003.2(d) refers to the granting of credit only pursuant to a new debt obligation. Thus, except as described in comments 2(d)-2.i and .ii, if a transaction modifies, renews, extends, or amends the terms of an existing debt obligation, but the existing debt obligation is not satisfied and replaced, the transaction is not a closed-end mortgage loan under § 1003.2(d) because there has been no new extension of credit. . . .”)

  • Official Interpretations, Regulation C, Paragraph 2(o), Comment 2 (“Extension of credit has the same meaning under § 1003.2(o) as under § 1003.2(d) and comment 2(d)-2. Thus, for example, a renewal of an open-end line of credit is not an extension of credit under § 1003.2(o) and is not covered by Regulation C unless the existing debt obligation is satisfied and replaced. . . .”)