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#2212024 - 04/24/19 10:27 PM Investment Property Secured by Ag Land
Chelsea C Offline
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Joined: Nov 2018
Posts: 14
I have a LO working through a loan that is for the purchase of a 1-4 family investment property primarily secured by tillable bare Ag land. If the dwelling is placed on the Ag land I believe it would be HMDA exempt. However, if this investment property is located in town and not on the land in which the proceeds are primarily Ag purpose, would this be HMDA reportable? If it would be solely secured by the Ag land, it would be exempt I believe. If it's even partially secured by a dwelling and no other exemptions apply, it would be HMDA reportable correct? I know the Reg states that we "may use any reasonable standard to determine the primary use of the property" but would the property be the investment property? Or the collateral?

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#2212080 - 04/25/19 03:05 PM Re: Investment Property Secured by Ag Land Chelsea C
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
All loans secured by a dwelling on Ag property are exempt - period. Here's the answer I posted in a similar thread in the "HMDA Overhaul 2018" forum a few days ago. I believe the answer fits your scenario exactly.
https://www.bankersonline.com/forum/ubbt...ies#Post2211331


The 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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David Dickinson
http://www.bankerscompliance.com

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#2212830 - 05/03/19 09:15 PM Re: Investment Property Secured by Ag Land David Dickinson
Chelsea C Offline
New Poster
Joined: Nov 2018
Posts: 14
I appreciate the response and the direction to a really good example Dave, but I need to question something because I'm still not completely convinced.

You quoted the portion that states "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" but this loan doesn't fit that definition in my mind. The loan was going to be secured by ag land, but it was also going to be secured by a residence NOT on the farm land. The house being purchased was for an investment property and the property was located in town and not on the farm. Am I incorrect in thinking this is ag purpose and just happens to partially be secured by ag land? But not solely by ag land? And the house isn't on the ag land, but rather in town? Sorry Dave, I'm not trying to agree with you.

I took your advanced HMDA "401" training recently and appreciated the depth you went into on these situations.

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#2212859 - 05/06/19 01:53 PM Re: Investment Property Secured by Ag Land Chelsea C
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,643
Chelsea C, I believe I see you point and I think this might be reportable.

I agree with David that if there was also a dwelling on the land, this would be exempt. However, you specifically said this:

Originally Posted By Chelsea C
I have a LO working through a loan that is for the purchase of a 1-4 family investment property primarily secured by tillable bare Ag land...If it's even partially secured by a dwelling and no other exemptions apply, it would be HMDA reportable correct?

This situation is different than having two dwellings where one is on ag land (which is David's example). Your's (at least your last question/scenario which I quoted from your OP) appears to be a situation where the land is "bare" AND the dwelling is completely separate from the land (and the purpose is not ag).

As a reminder, the ag exemption is a two part test: 1) The exemption applies if the "funds will be used primarily for agricultural purposes", or 2) "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)." Unless I am misunderstanding something (and I admit I may not have all information), it appears that 1) your funds will NOT be used primarily for ag purposes (as you appear to state the purpose is to purchase a 1-4 family investment property) and 2) the loan is NOT secured by a dwelling located on real property used for ag purposes (as you said this is bare land).

Therefore, I don't seeing this specific situation meeting either part of the two-part agricultural test, and thus IMHO this would be reportable (unless, of course, there is additional information I am not aware of that would make the purpose of the funds to be used for ag purposes).
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Adam Witmer, CRCM

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

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#2212960 - 05/07/19 01:38 PM Re: Investment Property Secured by Ag Land Adam Witmer
Chelsea C Offline
New Poster
Joined: Nov 2018
Posts: 14
You said it much better than I did Adam and I appreciate your response. I ran this scenario through those two exemption tests like you spoke of prior to reading your response, and I do believe this is HMDA reportable. I appreciate the feedback from all parties and am grateful I have access to run these tricky scenarios through. Thanks all!

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#2213318 - 05/10/19 01:41 AM Re: Investment Property Secured by Ag Land Chelsea C
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Sorry I'm so late to responding to this. I've been swamped lately. After reading this again, I agree with what Adam wrote. I thought there was a dwelling on the farm land. Now I see that is not true. Since there is no dwelling on Ag land, the Ag exemption is not there.
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David Dickinson
http://www.bankerscompliance.com

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