I don't really "get" participation loans. I'm responsible for HMDA and I don't know if I'm dealing with a complete or only a partial file here. Having a hard time figuring out what to report on the LAR for a loan we originated, and then other banks participated in it.

1. Loan amount? The grand total, or only the portion we funded?
2. Action taken date? I usually get the action taken date and the loan amount from the Promissory Note. I don't see a recent Prom Note on these deals. I see only the Participation Agreement between the banks. For example, a loan originated in 2011 for $5 million and we funded it ourselves. By 2017 it was a $20 million deal, and we participated it out to 4 other banks. The only new doc that I have found (so far) is the Participation Agreement, signed by all the banks involved. I would expect to find, somewhere, that some bank (ours, right?) has a note showing the borrower owes - somebody - $20 million. Not seeing that.

bump

Off of the top of my head (maybe someone can confirm):
1. You originated the entire loan. Report the entire amount. If you purchased part of a loan through a participation, you don't report it. The lead bank does.

2. Was the original note in 2011 for $20 Million? If so, that should have been reported then. Whether it was fully drawn on, isn't a factor. Maybe that's why you can't find new promissory notes. If you made multiple loans since 2011, each should be reported. If you think there should be a $20 million note and can't find it, you have other issues. I would bring this to the attention of the loan officer or Sr. Loan Officer.

I would like to revisit this Participation discussion, but provide a few more specifics than was discussed between others. If you are the "lead" bank as well as the acting agent do you only report your portion of the Participation? For example, total Facility will be 35,000,000.00. Your bank (the lead bank) will have a Promissory Note I/A/O $25,000,000.00 and the remainder of the $10,000,000.00 is a Note from another institution. But again your bank is the Agent so you are responsible for all payments.

Also, flip the situation. Your bank is not the Lead Bank, nor the acting Agent. Do you report any portion at all?

The lead bank reports the full amount and any participating institutions do not report anything.

From the commentary:
"1. Partial interest. Section 1003.3(c)(8) provides that the purchase of a partial interest in a closed-end mortgage loan or an open-end line of credit is an excluded transaction. If an institution acquires only a partial interest in a loan or line of credit, the institution does not report the transaction even if the institution participated in the underwriting and origination of the loan or line of credit. If an institution acquires a 100 percent interest in a loan or line of credit, the transaction is not excluded under § 1003.3(c)(8)."

If I participate 100% of a loan from the lead bank (they wanted to maintain the relationship and take care of the customer) the who reports HMDA?

If I participate 100% of a loan from the lead bank (they wanted to maintain the relationship and take care of the customer) the who reports HMDA?

It sounds like you purchased the entire loan, so i don't get the "participation" label....if you purchased the entire loan and you're a HMDA bank and it's HMDA reportable you report it as a purchased loan.

I agree with raitchjay. If you purchase/participate 100% of a loan, it does not qualify for the exception under 1003.3(c)(8) and, therefore, you must report it.

From the commentary:
"1. Partial interest. Section 1003.3(c)(8) provides that the purchase of a partial interest in a closed-end mortgage loan or an open-end line of credit is an excluded transaction. If an institution acquires only a partial interest in a loan or line of credit, the institution does not report the transaction even if the institution participated in the underwriting and origination of the loan or line of credit. If an institution acquires a 100 percent interest in a loan or line of credit, the transaction is not excluded under § 1003.3(c)(8)."

That's why i don't get the use of the word "participation" in this context....but maybe that's just me. I use that word when a portion of loan is being bought or sold....not when the entire loan is being bought or sold. Not saying that's right or wrong....but that's what makes sense to me.

Sometimes you will hear 100% "participation" instead of saying "we sold the loan." I think it's generally a difference in terminology with consumer and commercial loans. Commercial loans are usually talked about in terms of "participations," so even if you sell the entire loan, it is called a participation (at 100%). I think it may also be because the servicing and relationship is also kept at the lead bank in such circumstances. So, they don't really use the term "sold" in such cases because of that.

I have a situation where the lead bank reported the loan for HMDA, however we purchased a percentage of it through a purchase participation. I realize that we would not report it again for HMDA. However, are we able to receive CRA credit for the purchased part of the loan now? Or how should a situation like this be handled? I am a bit confused with all of the information I am reading with some conflicting details. Any help is appreciated.