I have come across a loan that I need clarification on. The land is secured by a 23 acre plot of land that the borrower is purchasing - the appraisal states the previous owner used it for agricultural purposes so it was coded 1B and ended up on my CRA review. When visiting with the loan assistant, she told me this was not going to be used for ag purposes by the borrower. He has stated that he is thinking of putting an RV park on the property at some point in the future, but has no definite plan at this time.

I've read the call code instructions, which state that "farmland includes all land known to be used or usable for agricultural purposes, such as crop and livestock production. Farmland includes grazing or pasture land..." So yes, it is usable for ag purposes as stated in the appraisal. But I really feel like this falls more in the 1a category since he has stated that he is not using it for ag purposes.

So...how would you call code this?

Loans secured by vacant land, except land known to be used or usable for agricultural purposes, such as crop and livestock production (which should be reported in Schedule RC-C, part I, item 1.b, below, as loans secured by farmland).

I think that this distinction is important to note. Since the land is known to have been for ag purposes even though he isn't going to change it now it should be coded as ag because the property stands developed and ready to be used for ag. If the purpose of the loan were to develop the land into something else then we could no longer say that the land is capable of supporting ag. As for his speculative hopes for the property those are not tangible in our consideration.

Thank you!