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#2211331 - 04/17/19 01:46 PM
2 collateral properties
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100 Club
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Posts: 207
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HMDA's Commentary explains that "A loan or line of credit is used primarily for agricultural purposes if its funds will be used primarily for agricultural purposes, or if the loan or line of credit is secured by a dwelling that is located on real property that is used primarily for agricultural purposes (e.g., a farm)" and, that agricultural transactions are exempt.
I have a scenario where we took 2 pieces of collateral, with the purpose of the loan being to purchase a (non-farm) primary residence. One piece of collateral is the purchase property, and the other is a farm.
First of all - IS THIS EVEN REPORTABLE? The commentary says if the loan is secured by a dwelling located on a farm.... which this loan partially is. However, it's also secured by a dwelling, to purchase a dwelling.
IF it is reportable, how many units is the loan secured by? Do we count the farmhouse as a dwelling? Or is the fact that the farm in and of itself would not be reportable outweigh the fact that a dwelling is located on the farmland?
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#2211408 - 04/17/19 06:12 PM
Re: 2 collateral properties
dutchbltz
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Based on purpose and location of PR purchase, it's definitely reportable. I'm on the fence for number of units ! I think you could argue it both ways if need be.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2211414 - 04/17/19 06:19 PM
Re: 2 collateral properties
RR Joker
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In this thread David gave a good summary answer that I think covers the OP's question. You pick one property and report IT consistently when reporting: 1. Construction Method 2. Occupancy Type 3. Property Address 4. Property Location 5. Lien Status 6. Manufactured Home Secured Property Type 7. Manufactured Home Land Property Interest When reporting the other data, you use all properties, not just the one chose for the above 7 items. So, you should report the number of units based on all properties taken as collateral.
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#2211419 - 04/17/19 06:25 PM
Re: 2 collateral properties
dutchbltz
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I think you may be missing the point, TR. The question is in regard to the farmhouse. If all that was involved were the farmhouse and farm, it would not be reportable at all because the 'farmhouse' would be exempt ie, not a dwelling.
Therefore, since it IS reportable due to primary purpose and off-farm primary residence purchase, do you have one or two units...I think you could argue it either way and likely not get slapped...a very rare situation shouldn't be penalized harshly I would not think.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2211421 - 04/17/19 06:27 PM
Re: 2 collateral properties
dutchbltz
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OK
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Where in the regulation does it say that an exemption can be nullified by another purpose?
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#2211422 - 04/17/19 06:31 PM
Re: 2 collateral properties
dutchbltz
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Power Poster
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Posts: 9,088
OK
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The regulation says a loan for a primarily ag. purpose OR a loan secured by land used primarily for ag. purpose is exempt. It doesn't (to my knowledge) give ifs, ands, or buts about that. Just asking because if there's been guidance on this that i missed, i'd like to know it.
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#2211427 - 04/17/19 06:37 PM
Re: 2 collateral properties
Truffle Royale
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Posts: 207
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The farm house is inhabited as a dwelling, however, it is not the dwelling being purchased. It's owned by the parents, actually, and is just extra collateral to improve CLTV and reduce risk. But since farms are typically exempt from HMDA, I'm not sure if it counts as a unit (because it IS a dwelling), or, if as one of the other posters suggested, if it is considered as vacant land.
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#2211546 - 04/18/19 06:53 PM
Re: 2 collateral properties
dutchbltz
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Joined: Nov 2000
Posts: 18,762
Central City, NE
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I have a scenario where we took 2 pieces of collateral, with the purpose of the loan being to purchase a (non-farm) primary residence. One piece of collateral is the purchase property, and the other is a farm.
First of all - IS THIS EVEN REPORTABLE? The commentary says if the loan is secured by a dwelling located on a farm.... which this loan partially is. However, it's also secured by a dwelling, to purchase a dwelling. Commentary to §1003.3(c)(9) #1 says to not report any loan/line …if the loan or line of credit is secured by a dwelling that is located on real property that is used primarily for agricultural purposes This doesn't say but, if, unless, . . . It says "Don't Report ANY loan/line that is secured by a farm house" (in plain English). It also doesn't say, report if: The farm house is part of the collateral, The farm house is not the only collateral, If you feel like you should. It simply says DO NOT REPORT these. I talked to a CFPB attorney about this back in 2017 and presented a scenario of a farmer moving to town. The farmer is giving his/her farm house as collateral to purchase a new home in town. The attorney stopped me and said "don't report it."
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#2211556 - 04/18/19 07:13 PM
Re: 2 collateral properties
dutchbltz
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The Swamp
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I talked to a CFPB attorney about this back in 2017 and presented a scenario of a farmer moving to town. The farmer is giving his/her farm house as collateral to purchase a new home in town. The attorney stopped me and said "don't report it."
I believe this falls short of the entire scene. My understanding was and has been that IF you have a farmer putting up collateral of his farm which contains a home to buy a new home away from the farm [that you are not taking as security] it would not be reportable.
I totally agree with this as not reportable.
What I'm not so sure would be hastily decided on is taking the dwelling being purchased that is nowhere near the farm and also taking the farm that has a dwelling on it.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#2211635 - 04/19/19 03:31 PM
Re: 2 collateral properties
dutchbltz
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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App#1- funds will be used to purchase a primary dwelling secured by a warehouse (property #1) and a rental dwelling (Property #2)- HMDA reportable
App#2- funds will be used to purchase a primary dwelling secured by a farm (property #1) and a rental dwelling (Property #2)- NOT HMDA reportable I agree with both. App #1 is reportable because you are purchasing a dwelling and the loan is secured by a dwelling AND because there are no exemptions for a warehouse. App #2 is not reportable. Even though you are purchasing a dwelling and it is secured by a dwelling, it is also secured by farm property. There is an "overriding" exemption that tells us not to report these. I didn't write the rules.
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#2211825 - 04/23/19 01:29 PM
Re: 2 collateral properties
dutchbltz
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100 Club
Joined: Oct 2015
Posts: 207
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Thanks everyone for your thoughts on this. We did not report.
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