Q: Is a loan to pay off a contract for deed considered a home purchase or a refinancing for HMDA reporting purposes?
A: A loan to pay off a contract for deed should generally be reported as a home purchase loan for HMDA reporting purposes if a dwelling secures the loan. Section 203.2(h) defines a home purchase loan as a loan secured by and made for the purpose of purchasing a dwelling. Although the borrower acquires some interest in the home through the contract, the borrower generally purchases and acquires full title for the home upon paying off the contract for deed. Conversely, a contract for deed transaction generally does not meet the definition of refinancing under §203.2(k). Because the contract for deed is not a dwelling-secured obligation, the loan to pay off the contract does not replace an existing dwelling-secured obligation and, thus, does not meet the definition of refinancing under HMDA.
This can be found in - HMDA FAQ#13 of the FAQs. The Federal Reserve Board FAQs can be found at: https://consumercomplianceoutlook.org/2011/second-quarter/hmda-and-cra-data-reporting/