I cannot make up my mind on this one. We have an applicant who is purchasing commercial property but will use part of the proceeds to turn one of the shops into his home. Is this home purchase? He really isn't purchasing an existing dwelling or constructing a new one.
Is this home improvement? The property will be improved with some of the proceeds.
Or maybe it isn't reportable at all. My train of thought keeps getting longer & longer!

I can see why you would be .

I'd go to the GIR and look at the alternatives allowed for mixed use property. It sounds like the majority of the property would not be residential therefore not reportable.

Does this help?
Definition from a 2004 HMDA workshop book:
"A home purchase loan means a loan that is both secured by and made for the purpose of purchasing a dwelling."

I would argue that it's a home improvement loan. If you look at page D-5 of GIR, under the mixed-use property section, it states "...is a home improvement loan if the loan proceeds are used primarily to improve the residential portion of the property..."

Whatever you decide, make sure the file is well documented as to how you made your decision.

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I would argue that it's a home improvement loan.

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But they are not improving a dwelling, they are constructing/converting "business" space into residential space. If the space was already being used as residential then I would agree.

I just have to play devil's advocate here. If they were buying a dwelling and converting it to commercial space (say a condo to an office), it would not be reportable because of the intended final use of the property. Wouldn't this be the same situation in reverse?

It doesn't matter what the intent is for the purchase. It is assumed "as is". I would not report it.

I agree with hmdagal. It would only be HI if the loan proceeds are used primarily to improve the residential portion of the property.

However, if this loan will be secured by the borrower's present dwelling, then it could be argued that it is a home purchase.

Either way, because the loan is dwelling secured, I think it is HMDA reportable.

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Either way, because the loan is dwelling secured, I think it is HMDA reportable.

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Being secured by a dwelling does not in itself make the loan reportable (except for refis and HI loans).

The purpose of this loan is to purchase business property and convert/construct a portion into a residential unit.

If under the mixed use rule they can show the property is "primarily" business use property the loan is not reportable, EVEN if an existing residential dwelling was present.

If the "conversion/construction" makes the property primarily residential then, IMO, it would be reported as a purchase, not HI because there is no "existing dwelling" to repair, rehabilitate or improve.