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#2203720 - 01/23/19 06:35 PM HMDA Reportable??
clinds Offline
Joined: Sep 2017
Posts: 64
If a 1-4 dwelling is being purchased and converted into a commercial retirement home, is this HMDA reportable? I've read the commentary about exclusions such as homes converted into professional offices or daycare facilities are not HMDA reportable; however, the commentary about properties with service and medical components talks about long-term housing...

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#2203723 - 01/23/19 06:53 PM Re: HMDA Reportable?? clinds
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,632
Great scenario complinewbie. I think the first question you need to ask is whether the commercial retirement home is considered a dwelling under the definition of a dwelling (and the commentary you mentioned). If this structure is determined to be a dwelling, then there is not doubt that this is reportable.

If it is not considered to be a dwelling, then the answer is debatable. We have had a few pretty in-depth discussions on these threads about this, but long story short is there are two camps as to how to report a dwelling that is inteneded to be converted into a nondwelling structure:

Camp 1 takes a forward looking approach to how the property will be used, and therefore, would not report the loan citing the finished structure as a non-dwelling.

Camp 2 takes a snapshot approach and views the property the way it is today, meaning that they would report it as a dwelling based on the home at the time of the sale. (There could be a few variables too, such as if the funds were not going to be used for the conversion vs using the funds to convert it to a retirement home.)

Personally, I am generally in Camp 1 as the purpose of HMDA is to report how a lender helps meet the "housing needs" of the community. That said, the CFPB has verbally told bankers (including myself) that the snapshot approach is the way to go, though they always give their disclaimer that this is only an opinion and not an official interpretation of the CFPB.

So to recap: You first need to decide if the commercial retirement home will be considered a dwelling. If so, it is absolutely reportable. If not, you need to decide what camp you are in and be consistent with how you report these types of loans.
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.

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#2203935 - 01/24/19 09:46 PM Re: HMDA Reportable?? clinds
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,616
Thanks for the Camp 1 and Camp 2 consistency, Adam smile.

@newbie - I'm one of the snapshot in time people on here (maybe the main one and Adam's being nice giving me my own camp, lol).

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#2203936 - 01/24/19 09:48 PM Re: HMDA Reportable?? clinds
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,616
That being said, I think even the forward looking use here sounds like a dwelling, but it would depend on how the facility is used in my experience with such types of "housing." Are the retirees staying long-term, or is it just short-term housing until they find something else relatively quickly? Those are some issues to answer even if using the Camp 1 approach.

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