From: Gina Fischer (Fischer Consulting)
Sent: Friday, February 13, 2004 12:15 PM
To: Comments
Subject: EGRPRA burden reduction comment

I am writing in regard to Regulation C, specifically, the definition of "refinancing".  I believe that unintended consequences from the revised definition will be realized for the 2004 reporting period.

Regulation C, Section 202.2 states:

 (k) Refinancing means a new obligation that satisfies and replaces an existing obligation by the same borrower, in which:

(1) For coverage purposes, the existing obligation is a home purchase loan (as determined by the lender, for example, by reference to available documents; or as stated by the applicant), and both the existing obligation and the new obligation are secured by first liens on dwellings; and

(2) For reporting purposes, both the existing obligation and the new obligation are secured by liens on dwellings.

The revised definition makes no exception for business purpose loans.  Many banks that specialize in agricultural lending secure their loans with land that contains the farm house dwelling.  Thus, non-temporary loans for agricultural purposes such as machinery and equipment loans and agricultural real estate loans are now HMDA-reportable. 

This revised definition is creating problems in agricultural banks in HMDA-reportable areas:  (1) Most ag lenders do not have experience with HMDA; (2) Reporting business-purpose loans is not the intent of HMDA and will skew results across the country; (3) Auditing for compliance is very difficult as there is no indicator that an ag loan is secured by a dwelling; (4) Adding such an indicator is not feasible because it could interfere with Call Report codes.

In addition, a definition of temporary financing under Regulation C would be appreciated. 

Sincerely,
Gina C. Fischer
Fischer Consulting Company (a bank-consulting company)