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#2257701 - 08/04/21 11:08 PM HMDA Reportable? Abundance of Caution Lien
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I have a loan populating our CRA LAR that I believe belongs on the HMDA LAR. The business purchased a residential investment property to sell later to an investor with another property as a package. The loan officer made the loan "unsecured", but they did an Abundance of Caution on the purchased residential property. Am I correct in that because they still technically have a lien on the property, although it is Abundance of Caution, it is HMDA reportable...and despite the Call Code being Commercial (4a) and not Residential RE (1c(2)).

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#2257708 - 08/05/21 04:35 AM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
raitchjay Online
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If the plans for repayment are the sale of the home (that is, if the plans for repayment aren't long term financing ( then yes, it would be HNDA reportable. As an aside...I don't understand exactly how the LO thinks this is abundance of caution when the loan is otherwise unsecured.
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#2257709 - 08/05/21 04:36 AM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
raitchjay Online
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(Well...I'm on my phone and can't edit...sorry for the typos.)
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#2257715 - 08/05/21 01:45 PM Re: HMDA Reportable? Abundance of Caution Lien raitchjay
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They purchased this home that is adjacent to a lot and a home they already own. The term is 12 months interest only. Their plan is to sell both home in a year to a developer who wants to build townhome development...so:

1) Although this loan is said to be unsecured and the property only taken as an Abundance of Caution, because we put a lien on the home, this is HMDA reportable, correct?

2) Given the circumstances, wouldn't this still be HMDA reportable and not exactly a "bridge loan" (regardless of interest only 12 month term and purpose).

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#2257716 - 08/05/21 01:49 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
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Is the plan after selling the home that they'll pay this loan off? Or is the plan to put this in long-term financing in 12 months? The answer to those questions is crucial to answer your question. You say they plan to sell the home, but i don't want to assume what the plans for repayment are.
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#2257717 - 08/05/21 01:53 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
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Although I would say the plan is to use whatever proceeds from the sale to pay this loan off, it was noted the included cash flow was based on P & I payments as if the loan were amortizing over a 15 year period.

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#2257719 - 08/05/21 02:01 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
raitchjay Online
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If the LO hasn't documented the file to clearly show what the plans are at maturity, i'd take the file back to him and get that clarification.
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#2257723 - 08/05/21 03:28 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
rlcarey Online
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You make unsecured 15 year loans to buy investment property. Not a HMDA issue, but someone has a screw loose regarding this being an abundance of caution.
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#2257730 - 08/05/21 04:05 PM Re: HMDA Reportable? Abundance of Caution Lien rlcarey
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Loan has a term of 12 months and is interest only. They calculated the cash flow using a 15 year amortization. My guess is they anticipate it being paid off when the subject property and the other properties are sold to the investor for the townhome development, but they wanted to play worst case scenario just in case the deal didn't finalize and the borrower needed to refinance the debt with a 15 year term.

If the Abundance of Caution didn't involve a lien being recorded, I would not consider putting it on the HMDA LAR, but with the lien, I feel I must consider it.

The next question is, "Does this loan qualify as a "Bridge Loan/Temporary Financing?" I do not believe it does, because the hopes/expectations do not come off as being guaranteed; thus, I feel it should be on the LAR. Do you agree?
Last edited by pp1865; 08/05/21 04:17 PM.
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#2257732 - 08/05/21 04:18 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
Skittles Online
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I agree that this does not qualify as a bridge loan/temporary financing. The intent is when the property sells the loan will be repaid so this is a short term loan and not a temporary loan. I also agree that this is HMDA reportable.

Your loan officers need to remember that the ONLY thing the 'abundance of caution' reference gets you out of as a financial institution is the appraisal. Everything else is still on the table - HMDA, flood, etc.
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#2257733 - 08/05/21 04:51 PM Re: HMDA Reportable? Abundance of Caution Lien Help! Compliance
raitchjay Online
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I really hope your LO isn't waiving the appraisal requirements on this "abundance of caution" loan that would otherwise be unsecured.
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