Here's the scenario: Borrowers buying a residential house to be used exclusively as a dog grooming facility. No apartment or rental income with this however part of the security is a 2nd mortgage on their personal residence. Although it meets the definition of a dwelling (residential structure), it is not used in any way as a residence. Would this be a HMDA reportable purchase?

For a purchase, you look at the collateral and the purpose. Since the purpose is to purchase a house to use as a business, it does not meet the HMDA requirements, even though their personal residence will be used for part of the collateral.

Correct me if I'm wrong, but, HMDA Getting it Right doesn't show exemptions for business purpose. It states that a purchase of a dwelling is covered in this case.

IMO because it is not going to be used as a residential dwelling, I wouldn't report it

I agree with Helium. The purpose of the loan appears to be the purchase of a structure to use for a business...not to be used as a dwelling.

This has been addressed numerous times in the HMDA forum. Search under Dan Persful's name to find some of the threads.

In order for a building to be a 'dwelling' it has to be dwelt in. If it is going to be used for business purposes only, no matter what it was used for before, it is not HMDA reportable.

Conversely, a converted warehouse could be a dwelling even tho it was not formerly inhabited by humans.

Thanks to all who weighed in on this. We too believe it is not a HMDA transaction in that the "dwelling" in fact will not be a dwelling but rather entirely a commercial enterprise.