Compliance Q&A: Refinancing a Second Home

Question:

We have a question on a loan that is a refinance of a purchase of a second home and is adding funds to pay off personal credit cards. Should be report the HOEPA Status as “Code 3 – NA”?

Answer:

Assuming the loan is just secured by the second home and is not also secured by the principal dwelling, then yes, it should be reported as “Code 3 – NA” like you said. The reason for this is that HOEPA only applies to: 

…a high-cost mortgage, which is any consumer credit transaction that is secured by the consumer’s principal dwelling…

https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/32/

So the HOEPA rules do not apply to this particular loan and, thus, it would be reported as not applicable for HMDA purposes.


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