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#2176894 - 05/07/18 01:59 PM Rental property or transitional housing?
RR Becca Offline
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out of the frying pan...
I'm looking at an interesting loan. Borrower is an individual with a large number of residential rental properties. This particular property is a large older house with a "mother-in-law" suite attached as well as a duplex located behind the main house. The loan approval mentions that after renovations are complete it will be added to his rental holdings and that a "lease agreement is already in place with [a local rehab facility] to rent the property as transitional housing for patients."

What I'm trying to determine is whether or not this property is a 'dwelling' for HMDA purposes. I think it is, because for our borrower it is intended to be a residential rental just like all of his other properties. I believe the fact that his arranged renter will be using the property as transitional housing is immaterial for our purposes, because if that lease fell through this would go back to being just another rental property. Would you agree? Or do you think an examiner would see that 'transitional housing' sentence in the approval and toss this one out?
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#2176899 - 05/07/18 02:10 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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I'd call it transitory and not report. I'm sure others disagree with that. The way i'd look at, the fact is that its occupant has a "primary residence elsewhere", and while your borrower may look at it as he would any other rental, the GIR seems to care about the occupants when determining whether it's a dwelling or not.
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#2176903 - 05/07/18 02:21 PM Re: Rental property or transitional housing? RR Becca
rlcarey Offline
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So you have to break it down as to whether a house that someone rents out will be subleased and then the nature of the subleasees? I think that is a little over the top.
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#2176904 - 05/07/18 02:23 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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It might be Randy, but i didn't write the GIR......
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#2176905 - 05/07/18 02:25 PM Re: Rental property or transitional housing? RR Becca
rlcarey Offline
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And where in the GIR does it say this?
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#2176908 - 05/07/18 02:30 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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The definition of "transitory housing" (sorry, i don't have the GIR handy, so if i don't quote this pretty much correctly, please feel free to correct it).....where it says "whose occupants have primary residences elsewhere".
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#2176910 - 05/07/18 02:34 PM Re: Rental property or transitional housing? RR Becca
RR Becca Offline
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out of the frying pan...
Randy, so you agree that for our borrower this is just a plain ol' rental house? What his renter does with it is not relevant to our loan?
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#2176911 - 05/07/18 02:35 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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I think the GIR says the renter is relevant. But like i said, i knew others would disagree.
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#2176913 - 05/07/18 02:38 PM Re: Rental property or transitional housing? RR Becca
RR Joker Offline
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I don't think the 2018 GIR dives that far into the prior 'explanation' and doesn't include "whose occupants have other PR elsewhere".

FWIW, I would not go with the sublease purpose. This borrower will rent this property regardless of what the renter uses it for and I don't see how the renter's use can possibly play into this. You may not would have ever known this had he not already procured a renter.
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#2176914 - 05/07/18 02:38 PM Re: Rental property or transitional housing? RR Becca
RR Becca Offline
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out of the frying pan...
Interesting discussion!

So that's 2 (3 really, including mine) for focusing on the borrower's purpose instead of looking past it into the renter's purpose. I just wasn't sure since that 'transitional housing' phrasing was right there on the loan approval, but I keep coming back around to thinking "but what if that lease falls through?"
Last edited by RR Becca; 05/07/18 02:40 PM.
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#2176915 - 05/07/18 02:41 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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I haven't really dug into the 2018 GIR.....if it no longer has the "whose occupants have other PR elsewhere" language, then obviously i would change my stance.
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#2176917 - 05/07/18 02:44 PM Re: Rental property or transitional housing? RR Becca
raitchjay Offline
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Originally Posted By RR Becca
Interesting discussion!

So that's 2 (3 really, including mine) for focusing on the borrower's purpose instead of looking past it into the renter's purpose. I just wasn't sure since that 'transitional housing' phrasing was right there on the loan approval, but I keep coming back around to thinking "but what if that lease falls through?"


I'll add this...IF that language is still there, the point to me is what you know at time of your loan consummation. We don't go back and delete loans from our LAR if 2 years into it, the customer razes the dwelling.
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#2192421 - 09/13/18 01:09 PM Re: Rental property or transitional housing? RR Becca
fretzer Offline
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I'd like to add a question to this discussion. Would you consider a multi-family unit that does short term leases transitory? The property is most likely used for student housing since it's close to several colleges. No where is "transitional" housing noted.

I'm inclined to keep this on the HMDA LAR since it's a multi-family unit in an LMI CT and leases are being signed, most likely for the school year. For all intensive purposes, this is the student's primary dwelling for the duration of school. Would love to hear others opinions.
Last edited by fretzer; 09/13/18 01:11 PM.
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#2192422 - 09/13/18 01:27 PM Re: Rental property or transitional housing? RR Becca
Dan Persfull Offline
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So, if the owner was leasing the property to the "Shelter for the Abused" organization to be used as temporary shelter for those in transition you would still consider the property a dwelling and not transitory housing? Or if he was going to lease the property to be used as a daycare facility you would still consider it a dwelling?

I have to agree with raitchay and treat the property as transitory housing based on the known intended use of the property.


Fretzer - off campus student housing facilities are not dormitories and would not qualify as transitory housing IMO.
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#2193311 - 09/21/18 01:18 PM Re: Rental property or transitional housing? fretzer
dutchbltz Offline
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Fretzer - we do a number of loans exactly like this, and we report them all.

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