When HMDA rules reference mixed use does it apply to mixed use buildings or mixed used properties where there is a residential building and commercial building on the same tract?

That's always been the $64,000 question......i think the consensus now is that it doesn't have to be within a structure, and i believe the revised HMDA rules better reflect that....but the current FAQs do a really bad job of stating that, if that was 'always' the intent.

It appears to use similar wording in the new rules. I have always applied it to be within a structure and I am afraid to change and not stay consistent. I don't want to be doing it wrong though.

It does not have to be the same structure. The example in the commentary is simply one example of one situation. If you have a business with multiple buildings and there happens to be one small building that is a dwelling on the property, you have a primarily non-residential property. This has been the case for years and has recently been confirmed with regulators.

I suggest that you submit a query to the CFPB and obtain a response that you can document for your financial institution's records.

Kathleen....to my memory, there is more than one example used...and every one of them references mixed-use only in one structure. Not disagreeing with your conclusion, but i do think they have done a really poor job of making it clear.

And I have told them that it is important to use better examples because people read the examples as gospel. They do state in other places that a "property" can be more than one building, such as the discussion of multi building apartment buildings.

The examples are to show you how to do the math to determine primary use, not to say this is the only type of property.

I agree with everything said here. The more people that contact the CFPB with these questions, the more likely we can get further guidance and illustrations.

I have reach out to the CFPB and will share any response I receive. When you say you agree do you mean with the take that mixed used is not restricted to the same structure?

Yes.

Response from HMDAHelp in 2009:

-----Original Message-----
From: hmdahelp@frb.gov [mailto:hmdahelp@frb.gov]
Sent: Wednesday, June 24, 2009 11:18 AM
To: Dan Persfull
Subject: RE: Mixed Use Property-a

The mixed-use property classification applies to a single building that houses both businesses and residential units AND to properties that contain both "stand alone" dwellings that are used as a dwelling only and other "stand alone" buildings used for business purposes only.

If you have a loan that meets the requirements for more than one loan purpose, the reporting hierarchy is home purchase, home improvement, refinance.

HMDAHELP.

Out of curiosity what changed your mind since March? Below is a response from a thread in March of this year. Has there been guidance issued since then or a regulatory training?

" I agree with you raitchjay. My interpretation of the "mixed use" Commentary to §1003.2 has always been concerning a single building. The example given in the OP is about a property with several buildings - one of which is a dwelling. I don't think the "mixed-use" logic can be applied.
_________________________
David Dickinson
http://www.bankerscompliance.com "

Since it appeared by the order of the posts that you were addressing Dan, i just wanted to add clarity....that quote is David's not Dan's.

Not David, but he has spoken with the CFPB on this topic (we discussed). He can confirm but is likely running around all day. I just happened to spin by here in my travels.

My last post on this topic (hopefully for a while).....but IMO, we shouldn't have to shoot off emails to HMDA Help (in the past) or to the CFPB (today).......it ought to be clear from the text of the regulation and its commentary what is meant. Up to this point, it has not been clear. I know that you can say that "property" can mean all the structures on a piece of land...that makes sense. But since they were never going to use the terminology "mixed-use DWELLING" (after all, if the test determines that the primary purpose is commercial, it isn't a "dwelling" at all)...so "mixed-use PROPERTY" can seem like a generic term used to replace "structure". I don't bring it up to start that argument all over again.....just that again, these things ought to be made very clear in the text of the regulation and the commentary.

It would be much more efficient for all parties.

KB is right. Since March, I've been studying the new rules & have spoken to the CFPB several times. This has provided clarification to several issues that aren't supposed to be changes to today's rules. This has what has led to the change in my opinion since March.

Does it matter if the buildings are on separate but contiguous parcels, each with their own address? We have a loan to purchase 5 buildings that sit on 7 contiguous parcels, 4 of which are commercial buildings and one is a residence. They each have their own address, with their addresses being on 3 different streets that connect to each other. Obviously if we treat this as a mixed use property it would not be reportable due to the majority of the buildings being commercial but do we have to report it because the one dwelling sits on it's own parcel? I feel that this is still a mixed use and we should not report.

Does it matter if the buildings are on separate but contiguous parcels, each with their own address?
No. In fact, the new rules give an example of multiple buildings at different addresses. I'm not able to put my finger on the specific citation right now.

Thanks for the reply David.