Question: Have a customer who just opened up a HELOC in November 2017. With the changes in the tax law now where a HELOC interest in not deductible he wants to just term the loan the loan out over the same period of time. So he is basically going from interest only payments to a full P & I payment over the same number of years to pay it off at maturity. Since the loan was originally a HELOC product in 2017, and we are going to do a modification to get rid of the availability as a line of credit and do a new payment amount of P & I is the loan HMDA reportable now in 2018 as a regular mortgage loan since it is no longer a true HELOC product? We have actually got a few phone calls about this with the new tax law on HELOCs.
Answer: If the change can be accomplished with a “modification” of the existing credit, then it is not HMDA reportable.
However, if the transaction is actually a case of the closed-end loan that “satisfies and replaces” the existing HELOC, then it IS HMDA reportable as a “refinancing.” Whether it “satisfies and replaces” the HELOC is a matter of state law. You will need to check with the bank’s legal counsel for guidance on this issue.
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