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#2169132 - 03/20/18 02:02 PM Multiple Properties, 1 commercial and 1 residentia
Somer Offline
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Is this loan HMDA reportable and if so, how do I report:

Have a loan to a LLC in which the developer is refinancing to take cash out for the purpose of purchasing future residential investment properties. The collateral that is securing the loan is both a commercial warehouse and a residential condo. The warehouse has an existing lien, which will be paid at closing and the residential condo has no existing lien.

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#2169141 - 03/20/18 02:51 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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The purpose {Purchase residential RE] is a reportable purpose and you have a dwelling as security, so yes.
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#2169156 - 03/20/18 03:29 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Adam Witmer Offline
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I agree.
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#2169183 - 03/20/18 04:59 PM Re: Multiple Properties, 1 commercial and 1 residentia Adam Witmer
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even if said residential real estate is not identified?

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#2169187 - 03/20/18 05:24 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Dan Persfull Offline
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Yes. A loan secured by a dwelling to purchase a dwelling is a reportable dwelling purchase regardless if he dwelling being purchased has been identified.

A Financial Institution may rely on an applicant’s oral or written statement regarding the proposed use of the loan proceeds. For example, a Financial Institution could use a check box or a purpose line on an Application form. If an applicant provides no statement as to the proposed use of the proceeds, and the Covered Loan is not a Home Purchase Loan, cash-out Refinancing, or Refinancing, a Financial Institution reports the Covered Loan as for an “other” purpose. Comment 4(a)(3)-1.
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#2169189 - 03/20/18 05:25 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
hmdagal Offline
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Yes. There is no requirement to identify the dwelling(s) to be purchased.

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#2169251 - 03/20/18 08:00 PM Re: Multiple Properties, 1 commercial and 1 residentia hmdagal
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We get these types of loans on our commercial side ALL the time. So if my lenders say "for future investment purposes" only, leaving out the words "residential real estate" then it's not HMDA reportable even if it's dwelling secured because it's not a purchase, refi or home improvement. Correct?

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#2169257 - 03/20/18 08:07 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Dan Persfull Offline
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If your senior management allows the loan officers to purposely not determine the true purpose of the loan then you have issues.

9.2.2 HMDA responsibilities

A Financial Institution’s management should ensure that procedures and systems exist to collect and maintain accurate data for each Covered Loan and Application that the Financial Institution is responsible for reporting. The individual(s) assigned responsibility for preparing and maintaining the data should understand the regulatory requirements and be provided the resources and tools needed to produce complete and accurate data. ..............
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#2169280 - 03/20/18 09:18 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
David Dickinson Offline
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I agree with everything stated IF the collateral property is classified as a dwelling. The OP said "The collateral that is securing the loan is both a commercial warehouse and a residential condo." This is a mixed use property. If it's classified as primarily a non-dwelling, then the loan would not be secured by a dwelling. Therefore, it would not be subject to HMDA reporting. If it's classified as primarily a dwelling, then it is a HMDA purchase.
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#2169302 - 03/21/18 12:04 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RVFlyboy Offline
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David, I took it as two separate pieces of collateral, not one mixed-use property. I guess that point needs to be clarified for an accurate answer. If the property to secure the loan is a single mixed-use piece of property classified as primarily residential, then the loan would be HMDA reportable. If the property to secure the loan is a single mixed-use piece of property classified as primarily commercial, the loan would not be HMDA reportable. If the property to secure the loan is two separate pieces of property, one commercial and one residential, the loan would be HMDA reportable.
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#2169325 - 03/21/18 01:42 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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I did too...but only the OP can clear that up for sure. It just didn't sound like the type of properties to be on one tract smile
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#2169333 - 03/21/18 01:53 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
David Dickinson Offline
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I don't think it mattes if it's one building or not. The mixed use property exemption found in Commentary to §1003.2(f) #4 could be a single building or multiple buildings. "Property" can be a parcel of land and even have different addresses. Refer to §1003.4(a)(9) #3 for clarification on this.

I do see these types of buildings in old downtown areas where warehouses are being developed into restaurants/bars/etc. on the first floor and the floors above are residential apartments/condo's.
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#2169337 - 03/21/18 02:05 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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My comment was 'same tract' not 'one building'. I totally agree with the mixed use on downtown business/condo, but would never consider mixed use if I have multiple pieces of collateral scattered over different areas .
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#2169344 - 03/21/18 02:24 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Dan Persfull Offline
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My comment was 'same tract' not 'one building'. I totally agree with the mixed use on downtown business/condo, but would never consider mixed use if I have multiple pieces of collateral scattered over different areas.

I agree and that is how I took Beech's explanation.

If the warehouse and condo are on the same property, even though they may have separate mailing addresses, you can apply the mixed-use criteria. But if the loan is secured by a warehouse located at XYX Business Complex and the condo is located across town at ABC Green Acres Condo Complex the loan is secured by multiple properties, not mixed-use property.

This is another example of why the person posting questions need to be more precise in the details, otherwise all answers are strictly speculation based on the responder's perspective of the question.
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#2169350 - 03/21/18 02:34 PM Re: Multiple Properties, 1 commercial and 1 residentia RR Joker
Adam Witmer Offline
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Originally Posted By RR Joker
... 'same tract' not 'one building'. I totally agree with the mixed use on downtown business/condo, but would never consider mixed use if I have multiple pieces of collateral scattered over different areas .
FWIW - I also agree.
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#2169360 - 03/21/18 02:59 PM Re: Multiple Properties, 1 commercial and 1 residentia Dan Persfull
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Dan, our footprint is in very urban areas, with many mixed-use buildings. Many of our borrowers that purchase property for investment purposes have mixed portfolios of both residential and commercial, and due to the urban nature of our footprint, there is a lot of mixed-use. So that is why we've generally allowed for the looser language because if there is not a specific property known at the time of origination, we don't know what type of property the borrower will invest in next. Many of the borrowers tap into the equity of their existing investment properties so that they have cash in hand for foreclosure sales.

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#2169365 - 03/21/18 03:18 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Dan Persfull Offline
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we don't know what type of property the borrower will invest in

It is still your FI's responsibility to determine the purpose of the proceeds based on the information obtained from the applicant and to gather the required information for covered loans under Reg. C.

I've been in this business since 1974 and when I was a commercial loan officer I never once had a customer that told me they had no idea what type of property they were looking to buy when they were applying for a loan. All I had to do was ask.

I'm not saying you have to be that strict....but on the other hand I would never accept a loan officer's claim they did not know what their customer's intended use for the money was.
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#2169391 - 03/21/18 05:01 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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Same here ^^^.
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#2169393 - 03/21/18 05:06 PM Re: Multiple Properties, 1 commercial and 1 residentia RR Joker
Somer Offline
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To clear this up. The loan is secured by 2 separate pieces of property. One is a commercial warehouse and the other is a residential condo. You are correct that it is not one property with a mix of commercial and residential space.

Sorry for the confusion.

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#2169397 - 03/21/18 05:27 PM Re: Multiple Properties, 1 commercial and 1 residentia Dan Persfull
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I think my point is more that if a borrower said, I'm shopping around for mixed-use property, how will we know if it's going to be a dwelling or commercial if the property has not yet been identified?
Last edited by DMSESQ; 03/21/18 05:28 PM.
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#2169401 - 03/21/18 05:44 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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I'm pretty sure in all my years either as a lender or directly involved in lending, I've never heard a customer say they were specifically looking for or were in the market for mixed-use property. They usually tend to have something more specific in mind although when the time comes, just because a commercial building or a residential with a commercial aspect presents itself, they may not rule it out.

More recently, I have heard LO's say 'well it's not really my business what they do'. Yeah, right. You're lending the bank's money so yes, it certainly IS our business.
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#2169402 - 03/21/18 05:45 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
raitchjay Online
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I don't think most consumers even know what "mixed-use" property is.
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#2169409 - 03/21/18 06:15 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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Commercial customers would though.
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#2169460 - 03/21/18 07:59 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
Dan Persfull Offline
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More recently, I have heard LO's say 'well it's not really my business what they do'. Yeah, right. You're lending the bank's money so yes, it certainly IS our business.


CMP: $250,000 Agencies: OCC Assets 9/30/06: $807 million
The International Bank of Miami, N.A., Coral Gables, Florida, is alleged to have violated the Bank Secrecy Act; to have engaged in unsafe and unsound practices when it failed to supervise adequately its Capital Markets Group (CMG); and to have failed to ensure that CMG's securities transactions were conducted safely, soundly, and legally. Specifically, the OCC's order alleges that the bank:
Violated the BSA and 31 CFR 103.33(a) [records of loan transactions] by permitting CMG to maintain records that frequently failed to adequately identify a legitimate business purpose for loans, or fully and adequately describe the nature and purpose of loans (loans were described merely as being for "working capital").
• Failed to maintain a system of controls to monitor and report suspicious activity.
• Failed to adequately identify and monitor accounts of politically-exposed persons (PEPs).
• Failed to monitor loans accounts and payments for suspicious activity.
• Did not have an adequate training program on detecting and reporting suspicious activity.
• Permitted CMG to make loans that did not conform to the bank's own lending policies, and to omit obtaining proper authorization for large credits.
• Allowed CMG to provide incomplete or inadequate loan documentation and recordkeeping, not in accordance with bank policies.
• Failed to do adequate customer due diligence, especially for high-risk customers.
• Allowed CMG to maintain an inadequate record of its securities transactions.
• Permitted OMG to engage in securities transactions in violation of OCC regulations.
• Allowed CMG to conduct securities transactions with high-risk countries without risk management procedures.
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#2169482 - 03/21/18 08:20 PM Re: Multiple Properties, 1 commercial and 1 residentia Somer
RR Joker Offline
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Right.
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