Are 2nd Mortgages Reportable if they are taken Simoultaneously with the 1st Mortgage?
Are 2nd Mortgages Reportable if they are taken Simoultaneously with the 1st Mortgage? ie. a piggy back loan. We have a customer asking this question and we are in the process of researching the issue. But, I just wanted to know if anyone had a quick answer and or link they could share with us. I am under the impression they would be, but I am just basing that on instict not factual basis. Here is what the customer's exact situation is... This customer uses MortgageWare by Harland and there is a field called 'Transaction Type' in her download. She has been told by Harland that if a customer takes out a 1st and 2nd at the SAME time, they (Harland) put an 'S' in the transaction type field for the second mortgage because they say they are unreportable. If a customer takes out a 2nd mortgage later on down the line, they put a '2' in the transaction type field, meaning it is reportable. Again, according to Harland, if there is an 'S' in that field, the 2nd is not reportable. The Loan Purpose field is grayed out also. Is it true that a 2nd would not be reportable if it is taken out at the same time as the 1st?
Here is some additionl non-conclusive evidence... A Couple references on this topic. HMDA Getting It Right - PAge D-6 section 6 "Second mortgages that finance the downpayments on first mortgages. If an institution making a first mortgage loan to a home purchaser also makes a second mortgage loan to the same purchaser to finance part or all the home purchaser's down-payment, the institution reports each loan separately as a home purchase loan." http://www.federalreserve.gov/pubs/bulletin/2006/hmda/default.htm has an entire section devoted to analyzing the HMDA data for 2004 and 2005 since the reg changes were implemented concerning First and Second Lien data collection. This would imply that "Piggyback" loans are expected to be reported since the fed is analyzing the data in that regard. http://fraser.stlouisfed.org/historicaldocs/ag05/download/29255/Greenspan_20050926.pdf illustrates further comments from the fed regarding the analyzing of the HMDA data in regards to "Piggyback" mortgages. See Page 10. Not withstanding the above references, I could find no specific reference that says "Piggyback" loans are reportable or not reportable. Their reportability is therefore inferred from the references above. I have sent an email to the HMDA helpline to inquire directly if a "Piggyback" mortgage that is NOT used as a down payment on a first mortgage is reportable or not. David Phillips RATA Associates, LLC Phone - 407-831-7282 Fax - 407-831-7963
Not to over simply this but in the HMDA Guide a home purchase loan is defined on page 8 as: "1. A home purchase loan is any loan secured by and made for the purpose of purchasing a dwelling." Page 9 has the list of transactions not to report. Second mortgages do not appear on page 9 as a transaction not to be reported. If the second is used to purchase a dwelling it sounds like it meets the definition of a home purchase loan and should be reported.
Thanks Paul, Hope all is going well... I agree it almost seems too simple. Which leads me to wonder why Harland went to the trouble of putting the artificial restrictions in their system. We have put the question iin an email to the HMDA helpline to get an official ruling and we will post that when and if we get it. Aprreciate the input.
All the more reason to use Comply and save yourself a headache [8D]
In an attempt to get final clarification on this issue, I posed the following question to the HMDA help line: The HMDA Getting it Right guide states "Second mortgages that finance the downpayments on first mortgages. If an institution making a first mort-gage loan to a home purchaser also makes a second mortgage loan to the same purchaser to finance part or all the home purchaser's down-payment, the institution reports each loan separately as a home purchase loan.". My question is, would a "Piggyback" or second mortgage used in the purchase of a home that DOES NOT finance the downpayment for a first mortgage be reportable under HMDA. My feeling is that it would, but I could find no direct clarification anywhere. The response was as expected it would be, as follows: This loan is HMDA reportable if it meets the definition of a home purchase loan - any loan secured by and made for the purpose of purchasing a dwelling.