I am reviewing a loan where the borrower is improving an 11-unit apartment building. They’re renovating a storage area and making 2 additional apartments. Should 11 units be reported, since that is the current number of units? Or, should 13 units be reported, because that is the total number after the renovations are made? (Can we prove that they actually used the loan proceeds to add 2 additional units?).

HMDA is an application regulation and is about the intention of the application, so you will report 13. Not sure I follow your parenthetical question, but you need to have something in file to support why you are reporting 13 units (construction plans, appraisal, borrower statement, etc.)

Question for a different scenario for reporting number of units:
Subject property is legally (permitted) a 6 unit apartment building, but they have an additional unit rented. We underwrite based on the income from only the 6 legal units. I am assuming we report 6 units for HMDA, despite there actually being a 7th unit rented out?

Is the loan secured by 6 or 7 units? If secured by 7 you report 7.

(31) The number of individual dwelling units related to the property securing the covered loan or, in the case of an application, proposed to secure the covered loan.

Yes, loan is secured by entire building and we have copies of rental agreements for 7 units, we just don't use the income from the un-authorized/illegal unit. Well, this adds a new twist for my 2018 reporting that I hadn't thought about before! Not that it happens frequently, but I'm sure I have at least a few I need to go verify what number of units we're reporting. Thanks Dan!

What is it that makes it illegal? Inquiring minds want to know.

Often it involves the capacity of an on-site septic system or even a zoning bylaw.

Yes, John is correct, it's permitted for 6 units max.

I'm interested in the expansion initial question. I am guessing this is just an intent of the Regulation analysis? There is no Regulatory reference for what to do when a multifamily property is expanded, as far as reporting Total Units, correct?

You report the known number of units based on the information that you have. What local zoning laws allow, I don't think is a consideration for HMDA. But if they are violating the law and the city closes them down, then you have a credit risk if your repayment is based on rents.

We have a Commercial loan secured with one manufactured home park with 17 pads and 1-4 single family residence in two different counties. How would we report the number of units in HMDA and what address?

If I understand correctly, you have 17 pads (that 17 for total units) and one, one unit dwelling (that's 1), for a total of 18.

For the address, pick one.
If there are multiple properties taken or proposed to be taken as security …a financial institution reports… a single entry on its loan/application register and provides the information for one of the properties taken as security that contains a dwelling. [Commentary to §1003.4(a)(9) #2 and #3]: