I have a loan that was given to finance a farm. The farm is under the 25 acre limit. The individuals will be living in the farm house; however, the farm will be used for business purposes for boarding horses and things such as providing riding lessons.

There is a lst lien on the property.

Is this house HMDA reportable?

IMO - If there is a dwelling and the loan is being refinanced - keeping the dwelling as collateral - IT IS HMDA. Doesn't matter what the farm will be used for - still HMDA. Someone lives there.

The loan is not a refinance, it is a purchase, does HMDA still apply even though the property contains a business?

HMDA applies because the borrowers are purchasing a DWELLING. They're not purchasing an established business. They're planning on using the land to make money but it's under 25 acres so it cannot be exempted from HMDA using that.

Quote:

There is a lst lien on the property.

??huh??

The loan can be exempted from reporting under the farm exemption in HMDA if it was to be used for an agricultural purpose. Acreage does not come into play when determining the use of the property. HMDA gives you the option of using RESPA's 25 acre rule as a determining factor if needed on a case by case basis. But the property does not have to be greater than 25 acres to meet the HMDA exemption.

Now with that said, boarding horses and giving riding lessons does not IMO meet the definition of an agricultural purpose. Therefore I would opine the loan is not exempt.


6. Agricultural purpose. An agricultural purpose includes the planting, propagating, nurturing, harvesting, catching, storing, exhibiting, marketing, transporting, processing, or manufacturing of food, beverages (including alcoholic beverages), flowers, trees, livestock, poultry, bees, wildlife, fish, or shellfish by a natural person engaged in farming, fishing, or growing crops, flowers, trees, livestock, poultry, bees, or wildlife. The exemption also applies to a transaction involving real property that includes a dwelling (for example, the purchase of a farm with a homestead) if the transaction is primarily for agricultural purposes.

I have to disagree with you TR (sorry, I don't usually!). If the purpose of the loan is to purchase a farm, it is not reportable. I don't think the 25 acres applies to Reg C...that is a RESPA thing. I think this has been discussed before, with Dave Dickinson using his family pig farm as an example. Maybe I'm way off with that example.

Anyway, I wouldn't report it. Now, when the loan is refinanced, I would report that as long as the new loan is also dwelling secured.

After reading Dan's post, I guess I would report it!


ETA: Dan's a way faster typer than I am!

That's what I get for going with the Cliff Notes answer. I know the 25 is RESPA and I know horse boarding does not meet ag. That's what I meant but Dan was much more thorough in explaining it...as usual.

Forget the 25 acres. As #12 referenced, I grew up on a 10 acre hog farm. It was absolutely a farm. The point is "what the land used for?" If it's a farm, the amount of aces don't matter. If it's more then 25 acres, that doesn't make it a farm either. It could just be a large lot.

Horse boarding sounds like an agricultural purpose to me.

Unless the person is engaged in the actual raising of live stock I would have to stick with my opinion that it is not based on the above definition from Reg. Z.

. . . by a natural person engaged in . . .