If a commercial loan is secured by multiple properties, should we aggregate all the property values for purposes of determining LTV? If so, in the case where I've satisfied HMDA purpose and secured by a dwelling, what do I do if I have multiple collaterals that may or may not be dwellings (i.e. land) OR even more, what if the properties taken as additional collateral are in 2nd/4rd/4th lien position?

...asking for a friend

You don't report LTV you report combined loan to value (CLTV) so yes, you would aggregate the value of all collateral securing the loan.

You would calculate the CLTV and report the value based on the value of the property or properties used in the credit decision.

If the loan is secured by 10 properties but you only use the value for 5 of the properties to make the loan decision then your CLTV and property value would be based on those 5 properties.

For this reporting requirement property refers to both real and personal property. So if an RV is securing the loan and the value of the RV was used in the loan decision then its value is combined with the other property values used in the decision.

Thanks!

I think I've finally got one where the CLTV is going to be NA, but would appreciate a second opinion.

Loan is secured by 4 properties. Credit memo states that "the listed LTV is only for property A, as the other 3 do not have current values and there is some debate over which real estate goes with the mobile homes."

That looks to me like another way of saying 'we didn't calculate a CLTV.' Agree? Disagree?

Afterthought: Would this mean that the property value should also be NA as we do not have values in file for all of the collateral?

Credit memo states that "the listed LTV is only for property A"

It would be my opinion the CLTV is based on property A and that is what you report.


6. Property. A financial institution reports the combined loan-to-value ratio relied on in making the credit decision, regardless of which property or properties it used in the combined loan-to-value ratio calculation . . . .

Thanks, Dan, that makes perfect sense.

One little twist, though: Property A is not a dwelling, it's a laundromat. The other three properties are rental mobile homes with land. Since I do not have good values in file for the 3 dwellings, what do I use for the reported Property Value? Still just the laundromat?

If the laundromat's value is what was used then that is what you would report.

It seems so simple when you say it like that.

Thanks!

I have two properties securing a commercial loan, one is a rental home valued at 70,000 and the second is a non dwelling commercial building valued at 250,000, Both properties are used for the CLTV.

I read somewhere for the property value - "if mixed collateral, dwelling and non-dwelling, only show the value of the HMDA reportable dwelling(s)"; that would by the 70,000. If I do that Questsoft does not calculate the CLTV correctly.

Would I report property value as 320,000 (include both dwelling and non dwelling) and CLTV as 78.125?

Thank you.

I have two properties securing a commercial loan,

What is the purpose of this commercial loan?

Ypu use the total value considered...even if it includes a backhoe.

"if mixed collateral, dwelling and non-dwelling, only show the value of the HMDA reportable dwelling(s)"

The person making this comment is wrong.

As RRJ stated you report the value of all collateral used in the determination.

Thank you for your help. Would this statement be correct for property value?

Abundance of Caution - If something was taken as an abundance of caution and it had nothing to do with the credit decision, do not include.

If you are including a value for an abundance of caution property in the determination then the property is not a true abundance of caution property.

This is an interesting question. We reached out to the CFPB on whether non-real property should be used in both LTV and CLTV. They told us "yes" for both. The Iowa Bankers Assoc (IBA) - people I trust that are very knowledgeable on the new HMDA rules - published in their March 2018 Disclosure magazine a Q&A that indicated CLTV includes all collateral, but LTV is to include only real property. I called and talked to one their compliance experts. She & I both sent an email to HMDA Help to verify what we knew. Both of us received confirmations from the CFPB (phone calls) that indicated we were right. In other words, I was told LTV should include all collateral (real property or not) and the IBA received was told LTV should only include real property.

I taught HMDA at this week's ABA Compliance Conference and brought up this issue. I stressed that we have to have concrete guidance, in writing, on these types of issues. There were CFPB representatives in the audience. A few of them approached me and said they would take my message "up" and hoped (but couldn't promise) we could get clarity on this.

I'll give you my assessment of that subject.

CLTV only comes into play when you have multiple collateral or multiple loans secured by property securing the reportable loan. The collateral could be real and non real property. LTV only comes into play for a single piece of collateral /single loan and if HMDA reportable, it stands to reason, this would be real property [or a MH/MH land]. But only one. There's nothing to 'combine' wink

ETA: Another thought. LTV doesn't even have it's own data point. Only CLTV which may be 1 or 50 pieces of collateral. I feel like they used both terms to cover single situations vs multiples.

ETA: It definitely covers non-real collateral as they use the example of 'securities' in the GIR.

Can't CLTV come into play if there are multiple LOANS secured by the same property/properties?

ETA: no longer relevant after Joker's edit.

Get out of my head, RJ !

Our commercial loan write up reads "minimum property value of $XX needed" for a CLTV of XX%.
it is up to the commercial lenders to verify that the appraisal meets this minimum value otherwise, the file gets returned to the credit analyst for restructure.

My question is do we report the "minimum value of $XX and the correlating CLTV or do we use the actual appraised value for non purchase money loans (purchase money we always use the sale price)?

I don't think one size fits all. What did they use to underwrite. That's what you report.

For instance, we don't 'always use the sales price' on a sale. We do for regulatory LTV purposes, but if the value exceeds the SP, we may underwrite based on the value. To each his own!

From what you've stated, it sounds like they are making a decision based on a minimum amount needed and is likely what will be reported unless that figure is adjusted once the actual value comes in.

Thank you. That helps a lot.

Do we count the non residential dwellings (such as land or commercial buildings) in the unit count?

No. (BTW, 'non-residential dwellings' is not what you meant to type i think.)

LO is getting ready to do a purchase loan for an 8-unit apartment complex. Purchase price is $200,000 but loan amount is $300,000 to fund improvements. LO is taking a junior mortgage on a 12-unit apartment complex that is already cross-collateralized on 8 different loans here. That apartment complex is valued at $500,000 but like i said it is crossed on other loans. How in the world do you calculate CLTV on our new loan? Just have the LO write down the property value and CLTV he is using to approve the loan?