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#2041183 - 09/29/15 03:40 PM Residential Real Estate vs. Commercial Real Estate
Ryan Yager Offline
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I've got a loan, it's commercial purpose, however it is secured by residential real estate and commercial real estate. A commercial purpose loan secured by residential real estate is neither CRA or HMDA reportable (unless it was a refinance, which old and new loans are secured by residential real estate, which this is not).

But the addition of the commercial real estate has me thrown off. Does it even matter? is it still neither CRA or HMDA reportable?

Or, since the value of the commercial real estate is greater than the residential real estate, is this a commercial loan and CRA reportable?
Last edited by Ryan Yager; 09/29/15 04:14 PM.
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#2041190 - 09/29/15 03:50 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
TMatt87 Offline
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Originally Posted By Ryan Yager
Normally a commercial purpose loan secured by residential real estate is neither CRA or HMDA reportable.


This statement is not accurate. A commercial loan can definitely be HMDA reportable and/or CRA reportable. If you refinance a commercial purpose loan that is secured by residential property, it meets the definition of a HMDA refinance and is reportable.
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#2041211 - 09/29/15 04:16 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
swiggles Offline
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A business purpose loan secured by residential real estate is not reportable as a small business loan. ...not sure how the addition of commercial real estate would affect it. How are you classifying the loan on the call report?
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#2041213 - 09/29/15 04:23 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Kathleen O. Blanchard Offline

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For the Call Report, and therefore for CRA, you look at whether the loan is PRIMARILY (>50%) secured by residential real estate to determine if the loan is classified as secured by commercial real estate, or other collateral.

However, if the loan is HMDA reportable (which has nothing to do with being primarily secured by residential real estate), it cannot also be a small business loan for CRA purposes unless it is being brought into HMDA because it is a refinance of a loan not originally HMDA reportable. (See the CRA Q and A.)

So, you must step through the HMDA loan purposes: is your loan to finance a purchase or residential real estate, improve residential real estate, or is it a refinance of a loan to same borrowers also secured by residential real estate?

If yes, then it is HMDA reportable and NOT a CRA small business loan unless it falls into the refi exception I noted above.

If your loan is NOT HMDA reportable and is not primarily secured by residential real estate, then it can be a small business loan if it otherwise meets those standards ($1 million or less, not real estate secured to a non profit, not to a municipality, etc.).
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#2041216 - 09/29/15 04:25 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Kathleen O. Blanchard Offline

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Not going through the edit hoop again.

If the loan is not HMDA reportable but is primarily secured by residential real estate, it cannot be a small business type 1, but can be a small business type 3 (other).
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#2041221 - 09/29/15 04:28 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
swiggles Offline
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Wonderful clarification! Thanks for stepping in!!!
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#2041224 - 09/29/15 04:33 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Kathleen O. Blanchard Offline

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Could it be more complex?
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#2041238 - 09/29/15 05:26 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Rocky P Offline
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The FRB Dallas revised their collection grid in January. The following is a link.
https://www.dallasfed.org/assets/documents/cd/pubs/craloan.pdf
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#2041348 - 09/29/15 08:10 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Ryan Yager Offline
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The loan is primarily secured by commercial RE so we reported as CRA. It is now being refinanced. The old and new loans have the residence as collateral, so now it will HMDA reported, as well as CRA reported because it is still primarily secured by commercial real estate.

Thanks for the help.

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#2041349 - 09/29/15 08:13 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Kathleen O. Blanchard Offline

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Yes, it falls into that exception for refinances.
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Kathleen O. Blanchard, CRCM "Kaybee"
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#2041350 - 09/29/15 08:14 PM Re: Residential Real Estate vs. Commercial Real Estate Ryan Yager
Kathleen O. Blanchard Offline

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If a bank has a lot of those, the regulators will "adjust" (remove) from their calculations. That does not happen often; it has to be enough refis to skew the results (so that will depend upon how many loans in total and how many refis that are HMDA reportable).
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