Trying to wrap my head around this for loans with multiple dwellings as collateral. In the Interpretations under Multiple Properties With More Than One Property Taken As Security, § 1003.4(a)(24) is not included as a field related to the property identified; rather, it is related to the loan/application. So, how is CLTV calculated when there are two or more properties as collateral?

I like working through examples:

$1MM loan to refinance two multifamily dwellings valued at $500k and $750k, respectively. The properties aren't encumbered by any debt except that which will be refinanced. Does CLTV = 0.8 ? If the client also adds a retail storefront (valued at $250k) to the collateral pool, does CLTV become 0.67 even though it isn't a dwelling?

My understanding of CLTV in the traditional sense is that it is used to compare all debt on a single property to the value of that same property. How can this work if multiple dwellings are under consideration? Is the answer as simple as "We didn't rely on CLTV, so we'll report 'N/A'" on ALL loans with multiple dwellings as collateral? If so, why didn't the CFPB specify that in the new rule?

You report what lending did, what it relied upon. If multiple properties were taken as collateral and all were included in the CLTV calculated and relied upon, that is what you report.

If multiple properties were taken as collateral but several were taken at the request of the customer for tax reasons and the financial institution only calculated an LTV on one property and relied on that as part of its credit decision, report that.

You need to know how the credit decision was made in order to respond.

You will notice that under property value they do have an example for multiple properties taken as collateral. Read these two together. Property value is at 28, while ltv is at 24 under 1003.4(a).

How are we to format the reporting of data fields like Combined Loan To Value ratio and Debt To Income ratio?

CLTV = $50,000+$30,000 loans / $100,000 home value = 0.8 = 80%

But the FIG's example is "80.05" without a percentage. Is it OK to assume that the CFPB's reporting tool will require reporting as a percentage? Or, is this another bad example within the Filing Instructions Guide in which we can't rely on the example as instructional (like loan amount without the cents!!)

What else can a ratio be but a percentage?

A decimal. 80k/100k = .8

A ratio can't be written as "80" by itself without a "%" or the specific instructions that any whole number should be treated as a percent.

@ Kathleen, reading the OI-2 for 4(a)(28), it seems to be really addressing multiple VALUES on ONE property. I don't see an example of which "Property Value" to report for multiple PROPERTIES.

When the CFPB released their proposed amendments, they specifically clarified the LTV field when taking multiple properties as collateral, but they did not clarify the Property Value field when taking multiple properties as collateral.

I am ASSUMING that if we take 3 properties as collateral, and we use all 3 of their values to make the LTV for our loan used in underwriting, then we will report the total combined value of all 3 properties in the Value field...but again they didn't specifically clarify that field. I know it sounds like an "obvious answer" question, but when the rule-makers specifically clarify one thing but not another, and since we know COMMON SENSE was not used when revising Reg C...then I don't know if I can apply common sense to this question...

Please help - thanks!

"When the CFPB released their proposed amendments, they specifically clarified the LTV field when taking multiple properties as collateral, but they did not clarify the Property Value field when taking multiple properties as collateral."

Banker K - Can you please direct me to this? I can't seem to lay my hands on where the clarification is. Thanks!

Nevermind, I found this in the comment to the location data points:

Comment for 1003.4(a)(9)-2 Multiple Properties With More Than One Property Taken As Security: Multiple properties with more than one property taken as security. If more than one property is taken or, in the case of an application, proposed to be taken as security for a single covered loan, a financial institution reports the covered loan or application in a single entry on its loan/application register and provides the information required by § 1003.4(a)(9) for one of the properties taken as security that contains a dwelling. A financial institution does not report information about the other properties taken as security. If an institution is required to report specific information about the property identified in § 1003.4(a)(9), the institution reports the information that relates to the property identified in § 1003.4(a)(9). For example, Financial Institution A originated a covered loan that is secured by both property A and property B, each of which contains a dwelling. Financial Institution A reports the loan as one entry on its loan/application register, reporting the information required by § 1003.4(a)(9) for either property A or property B. If Financial Institution A elects to report the information required by § 1003.4(a)(9) about property A, Financial Institution A also reports the information required by § 1003.4(a)(5), (6), (14), (29), and (30) related to property A. For aspects of the entries that do not refer to the property identified in § 1003.4(a)(9) (i.e., § 1003.4(a)(1) through (4), (7), (8), (10) through (13), (15) through (28), (31) through (38)), Financial Institution A reports the information applicable to the covered loan or application and not information that relates only to the property identified in § 1003.4(a)(9).

Since the CLTV and property value are at (24) and (28)…..you should report the CLTV that relates to “the covered loan” (i.e. all collateral) and not just the Identified property.

Thank you for providing this information. I was researching this topic this morning and this thread helped. But I have to play devil's advocate here and add another question to this; what if there is collateral taken that isn't a dwelling? "Property" isn't defined so I'm not certain if that would include any "property" taken as collateral. In example, if a CD is taken as additional collateral, would this be included in "property value"? It would certainly impact the CLTV. I'm just looking for guidance and clarification.

We asked the CFPB the same thing. Their response was "property" is all collateral. It could be a car, bare land, stocks, etc.

As a clarification - for both property value and CLTV, if we have multiple properties taken as collateral, and we relied upon the value of those properties in the loan decision, both of these fields would account for the combined values of multiple properties?

Correct. You are to report the total value of ALL collateral used when reporting Property Value and CLTV.

Thank you David!

It also appears when a loan is secured by multiple properties, we will add up the number of units for all properties taken as collateral? It appears to be carved out as loan specific and not property specific in the comment.

I'm running through testing scenarios and I have a loan secured by 2 SFRs and a duplex. So, data field 91 for # of units = 4?

Yes and Yes (to your two questions).

I'm reviving this one because we certainly don't need a new HMDA thread.

If we approve a conventional loan deal as being 95% max LTV, but after ordering the appraisal the end LTV ends up being 92%, which LTV do I report on the LAR? I could really go either way.

I'd report the 92%....95% might have been your max, but 92% IS the CLTV.

I agree. Report what it is not what you thought it might be or were willing to do.

Thank you both.

If this were a purchase for $100,000, loan is $80,000, LTV is 80%. The appraisal comes in at $102,500. Would we report 80% as the lender used the lesser of purchase price or appraised value for the underwriting decision/approval? I'm not for certain but I believe the AUS findings would also use the lesser of as well.

Paragraph 4(a)(28).

1. General. A financial institution reports the property value relied on in making the credit decision. For example, if the institution relies on an appraisal or other valuation for the property in calculating the loan-to-value ratio, it reports that value; if the institution relies on the purchase price of the property in calculating the loan-to-value ratio, it reports that value.