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#1874706 - 11/27/13 04:33 PM Commercial Loan HMDA Reportable?
JoAnne Offline
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I am looking at a refinance of a commercial loan secured by a church and a parsonage (two separate buildings next to each other but each with their own address.

I'm thinking this loan is a HMDA AND CRA reportable (refinance) because the loan is secured by the church and the parsonage which are two separate parcels.

The Commercial Loan Officer in charge of CRA and HMDA reporting on those loans does not believe this loan is HMDA reportable based on the "Mixed-use property" definition under the "Home Purchase Loan definition where it says "used primarily for residential purposes" and "an institution may use any reasonable standard to determine the primary use of the property" and concludes with "An institution may select the standard to apply on a case-by-case basis".

Any guidance would be greatly appreciated.
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#1874708 - 11/27/13 04:35 PM Re: Commercial Loan HMDA Reportable? JoAnne
manimal Offline
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#1874710 - 11/27/13 04:38 PM Re: Commercial Loan HMDA Reportable? JoAnne
raitchjay Offline
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The mixed-use test refers to a property (building) that has mixed-use. I don't know how you can look at a building that is exclusively used as a dwelling and try to claim "mixed-use" based on the use of some other building.
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#1874792 - 11/27/13 06:45 PM Re: Commercial Loan HMDA Reportable? JoAnne
JoAnne Offline
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manimal - thank you for you links to the other threads

raitchjay - I totally agree with you. But.......

My commercial lender got a reply from hmdahelp@frb.gov quoting the "Mixed-used property" section from page D-5 of the HMDA Getting it Right Guide and saying that the loan would NOT be HMDA reportable.

I am new at this bank, so do I ruffle some feathers.....or go with what hmdahelp has said?
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#1874796 - 11/27/13 06:52 PM Re: Commercial Loan HMDA Reportable? JoAnne
manimal Offline
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This is getting nitpicky of me... but did the lender explain to HMDA Help that it's two separate buildings with separate addresses?

Also... HMDA Help isn't always the most reliable resource for answering questions. I'd rather call up my auditor for their interpretation. But that's just my opinion (and we have a good relationship with our auditors).
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#1874798 - 11/27/13 06:54 PM Re: Commercial Loan HMDA Reportable? JoAnne
raitchjay Offline
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I'd ruffle feathers. If you're new, i'll give you this, (strictly my opinion, but i think you'll find others who agree): i don't even waste my time with HMDA Help anymore....i've seen numerous answers from them that were just flat wrong.

ETA: But you have to decide what's best for you and your bank. The above is strictly my opinion, and i don't have to function in whatever your bank climate is.
Last edited by raitchjay; 11/27/13 06:54 PM.
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#1874799 - 11/27/13 06:56 PM Re: Commercial Loan HMDA Reportable? manimal
raitchjay Offline
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Originally Posted By: manimal
This is getting nitpicky of me... but did the lender explain to HMDA Help that it's two separate buildings with separate addresses?



Great point.
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#1874801 - 11/27/13 06:58 PM Re: Commercial Loan HMDA Reportable? JoAnne
JoAnne Offline
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Thank you both so much. I think I'm going to ruffle some feathers.
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#1874803 - 11/27/13 06:59 PM Re: Commercial Loan HMDA Reportable? JoAnne
raitchjay Offline
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One last thought: if it were me, i would try to curb lenders going to HMDA Help (or any other source) for their HMDA information. I'd make them come to me. If i'm going to be answering examiner's questions every 4 years about my HMDA data, i want to be the final decision on things HMDA in my bank, and (again, this is me..i don't walk around in your shoes at your bank, so i'm not being judgmental or preachy at all here i hope) i don't want to have to defend some decision that a lender (or HMDA Help) made without my input.
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#1874869 - 11/27/13 08:29 PM Re: Commercial Loan HMDA Reportable? JoAnne
MMontjoy01 Offline
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This is from the HMDA Getting It Right 2013 Manual about Mixed Use Properties.

Mixed-use property. A loan to improve property used for residential and commercial purposes (for example, a building containing apartment units and retail space) is a home improvement loan if the loan proceeds are used primarily to improve the residential portion of the property. If the loan proceeds are used to improve the entire property (for example, to replace the heating system), the loan is a home improvement loan if the property itself is primarily residential. An institution may use any reasonable standard to determine the primary use of the property, such as by square footage or by the income generated. An institution may select the standard to apply on a case-by-case basis. If the loan is unsecured, to report the loan as a home improvement loan the institution must also have classified it as such.

This is how it was explained to us from our auditors. That we needed to set our standards in our procedures on how we are going to look at mixed use properties. We have decided for our institution we are going to go by the SF. I just had a loan that had 4 rental condo units upstairs and retail space below. Per the appraisal the retail space had over 9,000 SF and the condo units total had over 4,000 sf. We did not report it. I hope that helps and makes sense.

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#1874873 - 11/27/13 08:35 PM Re: Commercial Loan HMDA Reportable? JoAnne
manimal Offline
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I think what makes this situation challenging is that while the properties are related, they are separate parcels. So really, I think you must look at this the same way as if you had a commercial office building and a residence across town securing the same loan. They are separate properties, so the mixed-use rule can't really be applied.

If you'll notice the quote listed above, the guidance refers to property singular, not properties, or multiple properties securing the same loan. I think their intent was to use the mixed use rule on a property that has both commercial and residential use on the SAME parcel (as in the example provided). Just my opinion tho.
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#1874874 - 11/27/13 08:38 PM Re: Commercial Loan HMDA Reportable? JoAnne
raitchjay Offline
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I've always held to the belief that if my loan is to purchase the Empire State Building......................and a mobile home that somehow sits next to it.......i have a HMDA reportable purchase.

On the flip side, purchasing the Empire State Building that includes a small living quarters within it for a maintenance man would trigger the mixed-use test.....which "commercial" would obviously win.
Last edited by raitchjay; 11/27/13 08:39 PM.
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#1874877 - 11/27/13 08:41 PM Re: Commercial Loan HMDA Reportable? JoAnne
MMontjoy01 Offline
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I am with you Manimal. In the situation originally stated I would not consider that Mixed Use Property since they are on individual parcels and not attached to each other. One would be Commercial Building (Church) and the other 1-4 Dwelling (Parsonage) to me. To see if I would report the 1-4 Dwelling, I would then look to see if the previous loan being paid off was secured by a 1-4 Dwelling and to the same borrower.

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#1874894 - 11/27/13 09:14 PM Re: Commercial Loan HMDA Reportable? JoAnne
Kathleen O. Blanchard Offline

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I would treat this is HMDA reportable because the parsonage is a separate property. Re CRA, a loan cannot be both CRA and HMDA reportable except in limited circumstances (multi family and community development, HMDA refinance and CRA small business/small farm).

This would not be small business if HMDA reportable even if the commercial property is the primary collateral.

I have had banks pose questions to HMDA help and get a crazy answer and when I go to HMDA help with a fully explained situation, get what I know is the correct answer.


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