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#1651735 - 01/17/12 07:22 PM Apartments..........eventually
Glo Offline
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Joined: Jul 2005
Posts: 394
Arkansas
I have a question about a loan that is to purchase apartments that is actually an office building right now. They are going to do renovations and they will eventually be apartments. Do we report this as HMDA since they will be apartments in the end? Thanks in advance!

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#1651844 - 01/17/12 09:09 PM Re: Apartments..........eventually Glo
WI Banker Offline
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Joined: Dec 2006
Posts: 253
It doesn't matter what it is now, just think about the purpose of your loan. It would be reportable.

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#1651858 - 01/17/12 09:34 PM Re: Apartments..........eventually Glo
raitchjay Offline
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Joined: Oct 2009
Posts: 8,874
OK
I may be way off base here, but i keep thinking whether the loan includes funds for the renovations (and not just purchase of the building) might be relevant. On a smaller scale, for example, if a borrower gets a loan to buy an office building, then intends on his own to renovate it into a home (maybe with, maybe without a specific timetable), it would seem to me to possibly be a gray area. Perhaps in that scenario, the purpose of your loan would be to purchase an office building, period, whereas if the loan is also intended to fund the renovations, you would have a more concrete basis for calling it a dwelling for HMDA purposes.

As stated, i may be way off base here and i mention it only because i can't get it out of my head on this scenario.
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#1651870 - 01/17/12 09:38 PM Re: Apartments..........eventually Glo
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
I may be way off base here, but i keep thinking whether the loan includes funds for the renovations (and not just purchase of the building) might be relevant.


I agree. If none of the loan proceeds will be used to construct the apartment units then IMO this loan would not be reportable.

If any of the loan proceeds will be used to construct the apartment units then I would report it as a purchase. When I reported it would depend on whether the loan is a single phase const/perm loan or a 2 phase const/perm loan.
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#1651880 - 01/17/12 09:54 PM Re: Apartments..........eventually Dan Persfull
WI Banker Offline
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Joined: Dec 2006
Posts: 253
Originally Posted By: Dan Persfull
Quote:
I may be way off base here, but i keep thinking whether the loan includes funds for the renovations (and not just purchase of the building) might be relevant.


If any of the loan proceeds will be used to construct the apartment units then I would report it as a purchase. When I reported it would depend on whether the loan is a single phase const/perm loan or a 2 phase const/perm loan.


Good points. I was looking at it the way Dan described above.

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