|
Question: If we do an unsecured loan, with a “purpose” of home improvement, but we do NOT have a separate loan classification for home improvement loans, is it automatically reportable under HMDA requirements, or would it be at the option of the bank whether to report this type of loan?
Answer: If the proceeds of the loan are to be used primarily for home improvement on a 1 to 4 family unit, even if it is not secured, it needs to be reported.
12 CFR 203.2(g) Home improvement loan means:
(1) A loan secured by a lien on a dwelling that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located; and
(2) A non-dwelling secured loan that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located, and that is classified by the financial institution as a home improvement loan.
From the Staff Commentary:
2(g) Home improvement loan. 1. Classification requirement for loans not secured by a lien on a dwelling. An institution has “classified” a loan that is not secured by a lien on a dwelling as a home improvement loan if it has entered the loan on its books as a home improvement loan, or has otherwise coded or identified the loan as a home improvement loan. For example, an institution that has booked a loan or reported it on a “call report” as a home improvement loan has classified it as a home improvement loan. An institution may also classify loans as home improvement loans in other ways (for example, by color-coding loan files).
| 
