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#2200533 - 12/12/18 09:16 PM Group Home
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,333
I am reviewing a loan that is secured by a "group home" which, in these parts, is a home designed to be occupied by disabled (physically or mentally) individuals, the rent for whom is typically collected from Medicaid or maybe from a relative. This "group home" was initially a quadraplex (well prior to our loan) but, at some point, was modified to be all livable areas under one roof...I guess similar to four bedrooms with common areas. The appraisal still calls it a "fourplex." The tax roll still lists it as "residential." The owner is a single loan entity formed strictly to own this structure. The entity leases the entire property to and entity (or individual), who manages the group home and collects monies from the occupants.

Is this commercial or residential? Is it HMDA reportable and if so as how many units?
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#2200566 - 12/13/18 12:52 PM Re: Group Home swiggles
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 78,605
Galveston, TX
I think you are going to have to make the call whether this is long-term housing for the residents or not. A property used for both long-term housing and to provide assisted living or supportive housing services is a Dwelling. If you decide it is reportable, I think it would be four units regardless. The other question is you say you are "reviewing a loan secured by". What is the purpose of the loan?

Properties used to provide medical care, such as skilled nursing, rehabilitation, or long-term medical care, are not dwellings. If a property is used for long-term housing, to provide related services (such as assisted living), and to provide medical care, the property is a dwelling if its primary use is residential. Comment 2(f)-5.

A financial institution may use any reasonable standard to determine a property’s primary use, such as square footage, income generated, or number of beds or units allocated for each use. It may select the standard on a case-by-case basis. Comments 2(f)-4 and -5.
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#2200594 - 12/13/18 04:05 PM Re: Group Home swiggles
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,333
Presently, our regulators seem to be insisting on iron-clad proof of everything. So, no matter which way we go, I don't know that they will accept our "reasonable standard" decision. Our customer is leasing the building to another individual who operates the group home so I have absolutely nothing in file with respect to the person leasing it and their intended use.

The transaction WAS to purchase the property.

Since both the appraisal and the tax cert indicate "fourplex" and "residential," I think that would be a reasonable standard. I just hope examiners will buy it.
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