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#2112601 - 12/29/16 10:14 PM Multi-family?
banker-12 Offline
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If we have 5 four-plex buildings on the same property, can we considered it as a multi-family since there are 20 units in total for CD consideration? We report it as a multi-family for HMDA purposes so we are thinking it will be considered multi-family for CD purposes.

Thank You.

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#2112615 - 12/29/16 10:51 PM Re: Multi-family? banker-12
swiggles Offline
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It is not multi-family for HMDA. It is five 1-4 family dwellings.
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#2112632 - 12/30/16 12:45 PM Re: Multi-family? swiggles
rlcarey Online
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rlcarey
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Galveston, TX
Originally Posted By swiggles
It is not multi-family for HMDA. It is five 1-4 family dwellings.


Currently, that is correct. Under the upcoming new HMDA rules, not so much.
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#2112653 - 12/30/16 02:17 PM Re: Multi-family? banker-12
swiggles Offline
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I have always thought that NOT calling such complexes multi-family is stupid.....and doesn't make much sense.
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#2184956 - 07/11/18 06:33 PM Re: Multi-family? banker-12
banker-12 Offline
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We have a loan secured by 2 four-plex buildings, Can we consider it as a multi-family for CRA community development purposes? It is a total of 8 units?

Thanks

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#2187635 - 08/01/18 06:53 PM Re: Multi-family? banker-12
banker-12 Offline
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We can report this one and document it as a community development loan if multiple four-plex buildings are considered multi-family. There are a total of 8 units (2 four-plex buildings).

Can we count this one as a CD Loan?

Thank You.

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#2187827 - 08/02/18 06:12 PM Re: Multi-family? banker-12
mrogersfib Offline
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It is important to separate HMDA and CRA for this example since we have both topics going around this loan. First the definition of a dwelling is a residential structure with 1 to 4 units, but also includes multifamily dwellings which is a structure that has 5 or more units. Though this definition is mutual between CRA and HMDA--the definition of community was not previous to this years revisions of HMDA. Under CRA we have always said that a loan qualifies if it has a primary purpose consistent with the definition of community development. Where now HMDA also includes the definition of community which is why mobile home parks always qualified under CRA, but not HMDA beforehand.

Next utilizing the Loan Data Collection grid we have to see how the loan is secured. If the loan is secured by the land only, then it is possible that it qualifies as a CD loan if it has a CD purpose, but not HMDA. If it is secured by the residential units then we can say that this loan has a community benefit which makes it reportable under multifamily for HMDA, and CRA if it has a community benefit. But, on your call report this would be reported as a 1-4 family residential loan and thus you have to decide whether you want the loan considered on your lending test or community development test if you are a large institution.

Then for CRA it would be reportable if it met any of the following criteria:
-Located in an LMI/MIDU census tract
-Rent Restricted
-Affordability calculation
-Greater than 50% of the asking rents are below HUD FMR
-Greater than 50% of the units are lower than the affordable rent threshold which is 80% of the FFIEC estimated median family income (AMFI), and 30% of the AMFI divided by 12 for example ((($69,000.00*.80)*.30)/12)=$1,380.00
-Then determine the number of rents from the rent roll that are below $1,380.00 - 95% for illustration
-Optional calculation to provide in your narrative
-Take the lowest rent rate from the rent roll and determine the annual income needed to afford it for example (($600*12)/.3)=$24,000.00 then determine % of AMFI ($24,000.00/$69,000.00)=34.78%
-Take your highest rent rate from the rent roll that is below our affordable rent threshold which is $1,380.00 and determine the annual income needed to afford it. (($1,270.00*12)/.3)=$50,800.00 then determine % of AMFI ($50,800.00/$69,000.00)=73.62%
-The narrative insert would look as follows, "95.00% of the units are affordable to tenants earning between 34.78% and 73.62% of the 2018 estimated area median family income of $95,000.00.
-If less than or equal to 50% of the units are above HUD FMR, or are above the affordable rent threshold (use the lowest % of either to determine pro rata benefit).
-For example 35% of the units are affordable to LMI people and the loan amount is $1,000,000.00 then we would only report $350,000.00 of the loan to the examiners and indicate the original loan amount in your narrative.

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#2243572 - 10/05/20 10:42 PM Re: Multi-family? mrogersfib
banker-12 Offline
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We have not counted the 2 or 4 plexes, if the total combined units is more than 5, as multifamily for community development purposes. There are some at the bank that think it's not considered a multifamily.

We have been getting more loans with these types of collateral. Is it stated somewhere that we can include them? Have examiners considered them?

These loans do meet the criteria outlined in the previous post.

Thank You

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#2243579 - 10/06/20 01:45 PM Re: Multi-family? banker-12
Len S Offline
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Connecticut
See the staff commentary at 2(N)(3) " . . .a covered loan secured by five or more separate dwellings that are located within a multifamily dwelling, but which is not secured by the entire multifamily dwelling (e.g., an entire apartment building or housing complex), is not secured by a multifamily dwelling as defined by §1003.2(n). For example, assume that an investor purchases 10 individual unit condominiums in a 100-unit condominium complex using a covered loan. The covered loan would not be secured by a multifamily dwelling as defined by §1003.2(n)
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#2243602 - 10/06/20 04:41 PM Re: Multi-family? banker-12
banker-12 Offline
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Joined: May 2007
Posts: 1,240
Ok. Thank You. So since it's not reported as a multi-family loan under HMDA, we don't include it as a CD loan under CRA.

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#2243819 - 10/08/20 07:42 PM Re: Multi-family? banker-12
Len S Offline
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Posts: 2,084
Connecticut
There is no explicit written definition of multifamily in CRA. It assumes the HMDA definition is appropriate. Moreover, CRA doesn't allow credit for affordable mortgages on 1-4 family units except for mortgage-backed securities. So I don't see how you can get credit under the CD definition of affordable housing as it currently applies.
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#2280915 - 02/09/23 10:30 PM Re: Multi-family? Len S
BB Offline
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Posts: 28
Purpose is to Purchase & rehabilitate a 54-unit family development.
Last edited by BB; 02/09/23 10:31 PM.
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#2280917 - 02/09/23 10:33 PM Re: Multi-family? Len S
BB Offline
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Joined: Jun 2018
Posts: 28
What if there is an Apartment property that is secured by one two-story 12-plex building, one two story 8-plex building, and 17 duplex units (34 total units). They are all on the same property and all affordable LIHTC. [u][/u] Would this be ok for CD? The duplexes on the property are throwing me off but since it's all one community I'm thinking it may be fine, thoughts???
Purpose is to Purchase & rehabilitate a 54-unit family development.

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