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#2235979 - 04/30/20 03:09 PM Mixed Use Property
CB#3 Offline
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CFPB Factsheet: Transaction coverage under the ECOA Valuations Rule Has anyone else changed their thinking about the mixed use properties after reading the factsheet? I'm questioning what a residential structure is now.

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Lending Compliance
#2235983 - 04/30/20 03:23 PM Re: Mixed Use Property CB#3
rlcarey Offline
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Well if the residential structure and the commercial use structure is on the same parcel, I have no freakin' idea how you only take the commercial structure as collateral. That example was not thought through very thoroughly.
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#2235984 - 04/30/20 03:25 PM Re: Mixed Use Property CB#3
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I used to think a 20,000 sq ft store with an apartment that was 1,000 sq ft was a no brainer as to whether it was a dwelling or not. Now, not so much.

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#2236003 - 04/30/20 08:15 PM Re: Mixed Use Property CB#3
Adam Witmer Offline
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If you are a HMDA bank, this is going to be difficult to wrap your brain around and overdisclosure may be the best way out of this. Otherwise, its just a matter of learning the definition under the rule.
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#2236006 - 04/30/20 08:18 PM Re: Mixed Use Property CB#3
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There isn't a definition of residential structure within Regulation B. Before, it was the if the majority was commercial, it was commercial. This guidance now suggest otherwise.

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#2236014 - 04/30/20 08:37 PM Re: Mixed Use Property CB#3
Adam Witmer Offline
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You are correct and sorry about that. I should rephrase that and not say "definition", but rather follow the new guidance. Again, this will be a headache for HMDA banks where the mixed use won't align, but a bit of retraining on Reg B shouldn't be too bad. And over disclosure/compliance is always an option.
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#2236016 - 04/30/20 08:43 PM Re: Mixed Use Property CB#3
rlcarey Offline
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But it is defined (see below). How can a 20,000 sq ft store with an apartment that was 1,000 sq ft be a "residential structure"? Now, if there was a 20,000 sq ft store and a 1,000 sq ft single family house on the same property - sure. Of if you had a four unit apartment building and in one unit someone was actually running a tax preparation office out of it - sure. But those actually involve residential structures.

1002.14(b)(b) Definitions. For purposes of paragraph (a) of this section:

(2) Dwelling. The term "dwelling" means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.


Don't you love it when they try to help and just make things worse? Now we need them to interpret the interpretations.
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#2236017 - 04/30/20 08:52 PM Re: Mixed Use Property CB#3
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I've had to make so many arguments in the HMDA validation piece for our upcoming exam that they really need to define residential structure in the reg. Otherwise, I'm afraid of what the examiners may interpret this guidance as.

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#2236096 - 05/04/20 03:46 PM Re: Mixed Use Property CB#3
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I spoke with my EIC. That example I used, he said based upon strict interpretations would probably fall into the residential category. His comment was the more people that call in and start questioning, the better the likelihood it might get revised.

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