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#1688011 - 04/11/12 07:30 PM Occupacny Code for Business Entity
bamboozled Offline
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I am in confusion about what occupancy code to use when a loan is applied for and originated in the name of a business entity.

My loan is in the name of the business entity and secured by a single family dwelling.

I have found people saying to use Occupancy Code (2)non owner occupied, some saying to use code (3)not applicable and some saying I can even use code (1)owner occupied.
I have heard that the owner occupancy code does not relate to the borrower but to the owner of the property and how they occupy the dwelling? That since the entity is not a natural person it is NA?

Based on HMDA GIR page 12 it states:
Occupancy. For a one-to-four-family dwelling, including a manufactured home, indicate whether the property 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.

And the HMDA Glossary from the FFIEC defines Occupancy as:
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). If a loan relates to multiple properties, the institution reports the owner-occupancy status of the property for which property location is being reported.

Am I interpretting the GIR guide correctly that NA would not apply in this situations since it is not a Multi-Family and my property is in an MSA of my main office.
And that the definiation does make be relate the occupancy back to the borrower of the loan, which is my business entity, and not just an owner of the dwelling? Since this is an entity it cannot occupy any dwelling.

Are all business enity loans to be a code (2) non-owner occupied??

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#1688019 - 04/11/12 07:44 PM Re: Occupacny Code for Business Entity bamboozled
manimal Offline
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I would use code 2 (not owner-occupied as a principal dwelling) in the situation you described above. ("My loan is in the name of the business entity and secured by a single family dwelling.") Your reasoning and citations are sound IMO.
Last edited by manimal; 04/11/12 07:48 PM.
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#1688066 - 04/11/12 08:45 PM Re: Occupacny Code for Business Entity bamboozled
bamboozled Offline
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Thanks Manimal. I love when everything is subject to interpretation.

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#1688165 - 04/12/12 12:58 PM Re: Occupacny Code for Business Entity bamboozled
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Between the lines
We look to the owner of the property, not necessarily the name on the loan. How is the dwelling titled?

We do a lot of loans for business purposes where they purchase rentals and title the homes in their personal names. These are 2-not owner occupied.

Then there are renewals of business loans, in a business name, they pledge their personal home, titled in their own name. These are 1-owner occupied.

We have a few where the properties are held in the name of a business and these we code 2-not owner occupied. (Businesses don't live in houses, people do.)

We never buy any loans so I really don't have to deal with those.

Yes, NA is only for 5+ multi-family units.
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#1688194 - 04/12/12 01:37 PM Re: Occupacny Code for Business Entity bamboozled
bamboozled Offline
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Than really, the HMDA definition of Occupancy really does not matter, since the occupancy code should be related to who is in actual title to the property, not the borrower on the loan?

A little confusing when the FFIEC GIR and FFIEC HMDA Glossary seem to contradict themselves.

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#1688203 - 04/12/12 01:49 PM Re: Occupacny Code for Business Entity bamboozled
manimal Offline
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Excellent point SoccerMomQueen, I assumed (which I shouldn't have) that the business would also own the property. That is the situation we come across the most here.
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#1688205 - 04/12/12 01:53 PM Re: Occupacny Code for Business Entity bamboozled
raitchjay Offline
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OK
Originally Posted By: skigirl
Than really, the HMDA definition of Occupancy really does not matter, since the occupancy code should be related to who is in actual title to the property, not the borrower on the loan?

A little confusing when the FFIEC GIR and FFIEC HMDA Glossary seem to contradict themselves.


The LAR codes are "owner occupied" and "not owner-occupied", not "borrower occupied" and "not borrower occupied". To me (and i don't mean this sarcastically at all) that is the end of the story.
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#1688252 - 04/12/12 03:03 PM Re: Occupacny Code for Business Entity bamboozled
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Between the lines
True skigirl, and a lot of people have this very same question when they start working on HMDA. Probably because we read so much, read in a hurry and we really have to slow down and look at every word that we are reading.

Be sure that anyone working on your LAR understands the difference in borrower vs owner for occupied status.
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#1688255 - 04/12/12 03:10 PM Re: Occupacny Code for Business Entity bamboozled
bamboozled Offline
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Yep, hopefully I can get everyone in my business dept to understand this. Fingers crossed smile Thanks everyone.

Now if the FFIEC would get their definition of Occupancy to remove the word borrower and use owner so that it would match their GIR. These inaccuracies are what really trips you up.

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#1688317 - 04/12/12 04:31 PM Re: Occupacny Code for Business Entity bamboozled
Dan Persfull Offline
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Originally Posted By: skigirl
Yep, hopefully I can get everyone in my business dept to understand this. Fingers crossed smile Thanks everyone.

Now if the FFIEC would get their definition of Occupancy to remove the word borrower and use owner so that it would match their GIR. These inaccuracies are what really trips you up.


The Glossary on the FFIEC Web site has not been updated for whatever reason. The "borrower's principal residence" hasn't been applicable since the 2004 changes.

You need to rely on the cite you posted above from the GIR - also use this thread as back up if needed.


Based on HMDA GIR page 12 it states:
Occupancy. For a one-to-four-family dwelling, including a manufactured home, indicate whether the property to which the loan or application relates will be the owner’s principal dwelling.
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