The new HMDA data requirements introduced reporting whether a loan was a Refinance (code 31) or a Cash-Out Refinance (code 32). This has caused confusion for some banks. When it comes to HMDA coverage you are only concerned whether the loan meets the definition of refinance or not. Once you determine you have a reportable refinance loan, you may then need to distinguish whether it’s a cash-out refinance or not depending on your procedures. If your refinance loans are evaluated/underwritten the same way whether they have cash-out or not, you report them all as a Refinancing (code 31). If they are evaluated/underwritten differently, then you report them as either a Refinancing (code 31) or a Cash-Out Refinancing (code 32). For example, if your in-house refinance loans are all evaluated/underwritten the same, you will report all of them as code 31. If your secondary market refinance loans are evaluated/underwritten differently, some may be reported as code 31 and some as code 32. There is no definition of “cash-out refinancing” so it entirely depends on your underwriting, pricing and evaluation process.
This is just one data field of many that are causing confusion. If you want to learn more about the ins and outs of each data field join us on April 10, 2018, for our HMDA Data A to Z webinar!