We have a customer who is building what the loan officer calls an “ultimate barn” on his farm. It will replace his existing barn but it will have bathrooms, kitchen, bedrooms, spas, etc. He will not live here—his principal residence is separate. This is for recreation and entertainment along with the normal barn purposes. Could this be called a home improvement... or a second home?

IMO all actions that can be considered to increase the face value of the property in such a way that it increases the expected sales value of the home or the property are to be considered home improvements.

I think there are two issues here: 1) Is the "barn" on the same tract of land as the principal dwelling? If so, i agree with Pickles that it is improving the dwelling or the real property on which it is located. 2) If the "barn" sits on a separate tract of land from the principal dwelling, is the "barn" actually a dwelling? To me, this would be a judgment call, but if it has all the characteristics of a dwelling as you say, i would be hard pressed to say it's not a dwelling. So in either case, IMO: HMDA reportable HI loan.

raitchjay- It looks like it is #2-it is on a different tract than the customer's home. If it is a construction and if it is 25% ag use and 75% recreational use- is that HMDA? It will not be anyone's actual home just a guesthouse and play area.

Ok....think i missed that from your first post.....they're not just building on to the existing barn, they're replacing it with this new "barn", so you're dealing with a construction loan, whether a "dwelling" or a "barn". You said it would have bedrooms, bathrooms, a kitchen, etc.....i just can't get away from calling it a dwelling, esp. with your 25% ag use, 75% recreational use line. If you call it a dwelling, is your loan temporary and to be replaced by longer term financing? Most "barns", you would think not, but this one could be. Depending on the term, i would still lean towards this being a dwelling and depending on the temporary financing issue, i would report either this loan or the permanent financing that follows if applicable. Just my opinion and someone else may shoot holes in my theory.


ETA: reportable as a purchase, since you aren't improving the existing barn.