Determining the loan purpose: The new challenges [Part 1]

One of the common threads running across the new Uniform Residential Loan Application (“URLA”), the disclosure requirements of Regulations X and Z (“TRID”), and the reporting requirements of Regulation C (“HMDA”) is the requirement that the lender identifies the loan purpose.[1]  It is possible for the loan purpose to be the same for the new URLA and under TRID and HMDA.  This blog examines the need to recognize that the loan purpose may be different for each and what lenders can do to prepare for that eventuality.

Can there be more than one loan purpose choice for a single-purpose loan?

Consider the following single-purpose loan.  A prospective borrower takes title to a dwelling with an existing loan as a successor-in-interest.  The loan is assumable with the lender’s approval but the prospective borrower only seeks approval after taking the title.  The prospective borrower selects “Purchase” for the loan purpose on the new URLA. But is that it—is the loan purpose “Purchase” for the URLA and under TRID and HMDA?

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