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#1648792 - 01/10/12 07:35 PM HMDA question- owner occupancy
Dodge Offline
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I'm sorry if this seems basic, but I want to make sure I'm on the same page.

1. Owner Occupancy- We have a couple who borrowed money for business expense. The parents of the son put their house up for collateral, but they did not go on the loan. We now are refinancing the loan. On the HMDA worksheet, the owner occupancy would be owner occupied? Correct. Even though the parents are not on the loan, their house will be reported (since its be refinance) and they own the house and occupy it.

Last edited by giants06; 01/10/12 07:36 PM.
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#1648838 - 01/10/12 07:55 PM Re: HMDA question- owner occupancy Dodge
#12 Offline
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Yes, it is OWNER occupancy, not BORROWER occupancy.
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#1648868 - 01/10/12 08:12 PM Re: HMDA question- owner occupancy Dodge
Dodge Offline
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I'm fairly new to compliance and I saw a thread dated back in 2005 that stated "indicate whether the property to which the loan or application relates will be the borrower’s principal dwelling."

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=321526

So had me 2nd guessing. Thank you

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#1648873 - 01/10/12 08:31 PM Re: HMDA question- owner occupancy Dodge
complylady Offline
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Michigan
It goes by owner occupancy, this is from Getting it Right:
Owner Occupancy. Indicate
whether the property to which the loan or loan application
relates is to be owner-occupied as a principal residence by entering the applicable code from the following:
Code 1—Owner-occupied as a principal dwelling
Code 2—Not owner-occupied as a principal dwelling
Code 3—Not applicable

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#1648935 - 01/10/12 09:00 PM Re: HMDA question- owner occupancy Dodge
#12 Offline
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The GIR used to say borrower occupancy, but changed to owner occupancy. I can't remember what year that was, but I remember there was quite a discussion here in the Threads about it. I'll have to see if I can find it.
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#1648942 - 01/10/12 09:07 PM Re: HMDA question- owner occupancy #12
#12 Offline
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#1648967 - 01/10/12 09:24 PM Re: HMDA question- owner occupancy Dodge
SMQ, CRCM Offline
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Between the lines
Yes, always think in terms of "Does the OWNER of the dwelling that is being reported occupy the house?"
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#1711263 - 06/18/12 02:45 PM Re: HMDA question- owner occupancy Dodge
Sheryl R Offline
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Cedar Rapids, IA,
This thread is fairly close to my question, so I am going to piggy back off it. Mom, dad, and daughter are purchasing a property. Daughter will live in it. Mom and dad will not. Mom and dad are the borrower. Since 2 of the 3 owners won't live in the property - for HMDA purposes is this loan owner or non-owner occupied? thanks!

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#1711267 - 06/18/12 02:52 PM Re: HMDA question- owner occupancy Dodge
raitchjay Online
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If any of the owners of the property live in it, i would report it as owner-occupied.
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#1711283 - 06/18/12 03:27 PM Re: HMDA question- owner occupancy Dodge
SMQ, CRCM Offline
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Between the lines
^^^ ditto
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#1727074 - 08/03/12 03:22 PM Re: HMDA question- owner occupancy Dodge
Sgt. Pepper Offline
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I know that many posters on BOL believe that Owner Occupancy does not necessarily have any relation to the loan applicant. I disagree, but that is beside the point.

Below is a portion of a response I received from HMDA Help today regarding an Owner Occupancy question I submitted:

"When reporting information you are reporting information about the LOAN/APPLICATION/APPLICANT. So when you would report on the "owner-occupancy" for HMDA purposes you would be looking to determine whether the property was going to be "owner-occupied" by the applicant on the loan application. All information on the LAR (loan APPLICATION register) is related to the applicant.

If you determine your situation to be a refinancing and the applicant is an LLC and not an individual person, then you have the option to use code 2 (non-owner occupied). If the business is the applicant, it can never be "owner occupied" as the owner is an entity. The owner of the business is irrelevant if their name is not listed as the applicant on the application."


I post this only because I know that Owner Occupancy questions come up fairly regularly. Take it for what it's worth.
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#1727114 - 08/03/12 03:56 PM Re: HMDA question- owner occupancy Dodge
SMQ, CRCM Offline
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Between the lines
Sgt. Pepper, thanks for sharing.

If you follow the link above where Dan quoted the 2004 and 2006 guides, I think it makes it very clear that they intended to change from borrower occupancy to Owner occupancy.

Perhaps the person that answered you has been around a very long time or they were trained by an old timer.

As for me, I am sticking with what is written until they rewrite or revise via guidance.
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#1727127 - 08/03/12 04:13 PM Re: HMDA question- owner occupancy Dodge
Dan Persfull Offline
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Bloomington, IN
This advice is made based on pre 2006 changes to the HMDA requirements. You will find nothing in the regulation or the GIR to support this person's advice relating to occupancy status.

The occupancy status, since 2006, is reported based on the occupancy status of the owner of the property that is being reported, not the applicant's.
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#1728821 - 08/08/12 06:24 PM Re: HMDA question- owner occupancy Dan Persfull
MollyMacMe Offline
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OH
Dan - I hate to beat a dead horse but this thread has caused considerable conversation at my bank...and considerable disagreement. I'm totally confused because of the conflicting opinions. One of my associates went to the FFIEC website and downloaded this definition of occupancy from the HMDA Glossary;

Quote:
Occupancy
Indicates whether the property to which the loan application relates will be the borrower's principal dwelling. For multifamily dwellings (housing five or more families), and any dwellings located outside MSA/MDs, or in MSA/MDs where an institution does not have home or branch offices, an institution may either enter the code for not applicable or the code for the actual occupancy status.

For purchased loans, use code 1 (owner-occupied as a principal dwelling) unless the loan documents or application indicate that the property will not be owner-occupied as a principal residence.

For second homes or vacation homes, as well as for rental properties, use code 2 (not owner-occupied as a principal dwelling).

The definition indicates occupancy is determined by whether the "borrower" (aka applicant?) will occupy the property. Can you supply supporting material for your statement that;
Quote:
The occupancy status, since 2006, is reported based on the occupancy status of the owner of the property that is being reported, not the applicant's.
Thanks for your help.
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#1728837 - 08/08/12 06:37 PM Re: HMDA question- owner occupancy Dodge
raitchjay Online
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OK
Occupancy. For a one-to-four-family
dwelling, including a manufactured
home, indicate whether the prop erty
to which the loan or application relates
will be the owner’s principal dwelling.
For multifamily dwellings (housing
five or more families), and for any
dwellings located outside MSAs or in
MSAs where you do not have home
or branch offices, you may enter either
the code for “not applicable” or the
code for the occupancy status. For
more inform ation, see Appendix A,
I.A.6, and staff comment 203.4(a)(6)-1. (From the GIR.)
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#1728874 - 08/08/12 07:15 PM Re: HMDA question- owner occupancy Dodge
hmdagal Offline
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Not sure where your associate got that from, Molly. There is nothing in the Glossary about occupancy and rj quoted the current directions for occupancy from the instructions in Appendix A.

In the past, the reference to occupancy related to the borrower, but it's been several years since that changed.

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#1728927 - 08/08/12 07:56 PM Re: HMDA question- owner occupancy hmdagal
MollyMacMe Offline
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OH
Hi hmdagal;
This is the link they gave me for the glossary page that "defines" occupancy at www.ffiec.gov. Go to the O's for Occupancy.

http://www.ffiec.gov/hmda/glossary.htm

I am certainly not a HMDA expert but, my bank only lends to "owner occupied principal dwelling" properties. This is a very big deal issue for us, so I need to be certain before I go to management to suggest that we may have been misinterpreting 'occupancy' all along.
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#1728931 - 08/08/12 08:02 PM Re: HMDA question- owner occupancy Dodge
raitchjay Online
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6. Owner Occupancy. Indicate whether the property to which the loan or loan application relates is to be owner-occupied as a principal residence by entering the applicable Code from the following:

That's from Reg. C, Appendix A.

I did check the glossary and saw what you said was there. For me, i'd go with what the regulation and GIR says over that. My guess (and it's just a guess) is that that never got changed.
Last edited by raitchjay; 08/08/12 08:03 PM.
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#1728938 - 08/08/12 08:16 PM Re: HMDA question- owner occupancy raitchjay
MollyMacMe Offline
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OH
Thanks raitchjay and to all.

I agree that relying on Appendix A makes the most sense, and that's what I'll recommend. It may not make management happy but, that happens everyday around here.

Thanks again.
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The views, opinions, & judgments expressed here are mine. The contents have not been reviewed or approved by my employer.

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#1730055 - 08/13/12 01:55 PM Re: HMDA question- owner occupancy Dodge
Dan Persfull Offline
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Bloomington, IN
Molly, I have been out of the bank the past few days and apologize for not responding to your Glossary inquiry but raitchjay and hmdagal gave you the correct guidance.

The reference to "borrower" was replaced with "owner" in 2006. Based on this 2006 change you report the occupancy status based on whether the property being reported will be the owner's primary dwelling.
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#1731038 - 08/15/12 02:35 PM Re: HMDA question- owner occupancy Dodge
tumbleweed Offline
Member
Joined: Apr 2004
Posts: 86
Michigan
Hi,

So if I have a person renting and is appling for a home improvements loan on the property he is renting - the owner occupied should be "2" non owner occupied? Is this correct?
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#1731045 - 08/15/12 02:42 PM Re: HMDA question- owner occupancy Dodge
tumbleweed Offline
Member
Joined: Apr 2004
Posts: 86
Michigan
Hi

We have a person renting a house and has applied for a home improvment loan unsecured. Would this be HMDA and would the owner occupied by "2" for non-owner occupied?

Thanks
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#1731051 - 08/15/12 02:51 PM Re: HMDA question- owner occupancy Dodge
raitchjay Online
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Non-dwelling secured home improvement loans are only reportable if your institution classifies them internally as such. If you do classify them as home improvement and report them, the owner occupancy would be reported as non-owner occupied.
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#1731095 - 08/15/12 03:43 PM Re: HMDA question- owner occupancy Dodge
tumbleweed Offline
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Posts: 86
Michigan
Yes we classify as home improvement - but some staff believe because the borrower is a renter (does not own the home) it's not HMDA reportable. Your thoughts?
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#1731098 - 08/15/12 03:44 PM Re: HMDA question- owner occupancy Dodge
RR Becca Offline
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out of the frying pan...
HMDA does not rely on the borrower for reportability. It is driven primarily by the purpose and secondarily by the collateral. The only time borrower comes into play is the definition of a reportable refinance in that it must be "to the same borrower."
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