An individual borrowed $1,000 to remodel her mobile home. She lives in the mobile home that is not anchored to the ground. The loan will be secured by the mobile home, but the borrower does not own the lot on which it is parked. For HMDA purposes, this loan is considered to be which of the following types of loans?
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A. B. C. D.C
The loan in this scenario is secured by the mobile home, which means that the lender has a lien on the mobile home to secure the loan. However, the borrower does not own the lot on which the mobile home is parked. This makes it important to determine the type of loan for HMDA (Home Mortgage Disclosure Act) reporting purposes.
A. Consumer RV: This type of loan is typically used to finance the purchase of a recreational vehicle, such as a motorhome, travel trailer, or camper. It does not apply to a loan used to remodel a mobile home that is not intended for recreational use. Therefore, option A is not the correct answer.
B. Home equity: A home equity loan is a loan that allows the borrower to borrow against the equity in their home. Since the borrower does not own the lot on which the mobile home is parked, she does not have equity in the property. Therefore, option B is not the correct answer.
C. Home improvement: A home improvement loan is used to finance improvements to a property, such as remodeling or renovation. In this scenario, the borrower is using the loan to remodel her mobile home. Therefore, option C is a possible correct answer.
D. Second mortgage: A second mortgage is a loan that is secured by the borrower's property in addition to their primary mortgage. Since the borrower does not own the lot on which the mobile home is parked, she does not have a primary mortgage on the property. Therefore, option D is not the correct answer.
Based on the information provided, the loan is most likely considered a home improvement loan (option C). However, it is important to note that additional information may be needed to make a definitive determination, such as the specific terms of the loan and the lender's classification policies.