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#2260925 - 10/08/21 02:30 PM Transitory or Dwelling
Lizard60 Offline
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Brain freeze!!

I have an LLC purchasing a house and will be renting rooms to students attending college.

Can't think it that is transitory since it's only rooms or if still qualifies as a dwelling.

Thanks for the help!

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#2260931 - 10/08/21 03:26 PM Re: Transitory or Dwelling Lizard60
InFairness, CRCM Offline
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Is college housing the only use? No longer term/permanent rentals?
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#2260970 - 10/08/21 08:24 PM Re: Transitory or Dwelling Lizard60
Dan Persfull Offline
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Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices.

How is a 1-4 dwelling rented to students exempt as transitory? It is not a college dormitory, it is a privately owned rental property.
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#2260971 - 10/08/21 08:45 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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But its occupants are using it in a transitory manner. I realize that the "whose occupants have primary residences elsewhere" language is no longer in the regulation, but i think it's because it was considered redundant.

"Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices."

"Such as" is key IMO....it's not an exhaustive list. If someone is living temporarily in a 1-4 family unit, how is it not transitory? I realize lots of people won't agree, but i don't agree that it's an open and shut case....it wasn't when the "whose occupants have primary residences elsewhere" language was in the regulation, and i don't see why its removal (without some clarification in Reg. C that i don't see) changes the definition...or at least leaves it open to interpretation.

Just my opinion Dan....i respect yours.
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#2260973 - 10/08/21 08:49 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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Perhaps there was clarification in the preface or whatever it's called that i missed...if so, i'll gladly admit to being wrong and change my approach to these.....but without it, i think calling these types of rentals "transitory" is pretty easily defended.

ETA: And i do think reasonable minds can disagree on just how short a term a rental needs to be to be classified as "transitory". I think weekend rentals most definitely qualify as transitory. I can see how the slope gets more slippery for rentals of a longer period, reaching a year or more.....although i'm still personally inclined to a "transitory" designation any time the occupant is living in a dwelling on a discernibly temporary basis.
Last edited by raitchjay; 10/08/21 09:15 PM.
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#2260994 - 10/11/21 06:36 PM Re: Transitory or Dwelling Lizard60
InFairness, CRCM Offline
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I'd look to the nature of the lease - Is it for college term or a more general term? Does the lease allow termination if the renter leaves school? Are all resident students? If privately owned, does the landlord have an agreement with one or more colleges to provide housing to students? (There are a few of these in the metro ATL area, for example.) These types of features make it easier to prove the housing is transitory.

That said, I think you can make an argument that student housing is transitory by its nature.
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#2260995 - 10/11/21 07:26 PM Re: Transitory or Dwelling Lizard60
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Investment property. A property is an investment property if the applicant or borrower does not occupy the property. For example, if a person purchases a property, does not occupy the property, and generates income by renting the property, the property is an investment property.

I see no mention of the length of the rental or that the entire house could not be rented to multiple people at the same time. You would need to exclude all AirBNB and VRBO houses if that was a criteria.
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#2261010 - 10/12/21 02:14 PM Re: Transitory or Dwelling Lizard60
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Randy, perhaps there's no mention of the length of the rental because it's understood that if it's transitory, you won't be reporting it at all. That classification definition to me has no impact on the definition of a dwelling or transitory housing.
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#2261011 - 10/12/21 02:15 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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(I don't mean that to sound matter of fact or short....but it is how i look at it.)
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#2261042 - 10/12/21 08:07 PM Re: Transitory or Dwelling Lizard60
Dan Persfull Offline
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How is it tranistory? It is the student's residence while attending school. The 1-4 dwelling is not excluded as a dormitory nor does it qualify as temporary housing such as a half-way house..

3. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices.

I don't see student rental housing included in the exclusions. I also have never seen any guidance that excluded student rental housing.
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#2261043 - 10/12/21 08:20 PM Re: Transitory or Dwelling InFairness, CRCM
Lizard60 Offline
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Yes - it is only used for college housing

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#2261044 - 10/12/21 08:22 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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Definition of transitory: "not permanent". Since students by definition don't remain in college past graduation, i think it meets the definition. I agree it's not explicitly in the exclusions.......but since it is prefaced with a "such as" indicating it is not an exhaustive list, and it meets the definition of "transitory", it makes sense to me to exclude them. The same way that students don't live in dormitories permanently while in college, they don't live in these student rent homes permanently either. I don't really see the distinction, other than the fact is isn't listed as an example.
Last edited by raitchjay; 10/12/21 08:26 PM.
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#2261045 - 10/12/21 08:25 PM Re: Transitory or Dwelling InFairness, CRCM
Lizard60 Offline
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The LO only states that it will be rented to college students, does not state how long or year to year or term of school year. It is for students of University of Louisville.

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#2261050 - 10/12/21 09:04 PM Re: Transitory or Dwelling Lizard60
Dan Persfull Offline
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I have taken this position for years just as I did the position that a dilapidated house still met the definition of a dwelling under the regulation.

IMHO you have no basis under the regulation for excluding student rental housing as transitory residences simply based on the fact they will not remain living there upon graduation. If you are taking this position then you should be excluding all rental properties since the odds are the occupant will move somewhere else upon expiration of their rental agreement.
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#2261053 - 10/12/21 09:14 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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I think it's quite different to say "odds are this family renting this home will eventually move" than it is to rightly assume that pretty much no college student graduates, gets a job, and continues to live on fraternity row. But as i said in my original post, i knew there would be plenty of others who disagree. That's fine.....we can disagree. I'll continue to treat these the way that makes sense to me.
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#2261054 - 10/12/21 09:17 PM Re: Transitory or Dwelling Lizard60
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But i will add: i do take exception with "you have no basis under the regulation". I think i have plenty of basis, based on the argument made (both by me, and InFairness).
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#2261056 - 10/13/21 11:59 AM Re: Transitory or Dwelling Lizard60
Adam Witmer Offline
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I'm with Dan on this one.

I live two blocks from a college that permits off-campus housing for students (usually seniors) who are 21 years old or older. There are many rentals around me that claim to be for college students, but the reality is that they are just regular rentals even though the landlord might prefer college students. Case in point - when I moved in 5 1/2 years ago, I was told that the house next door was a rental for college students. In the six seasons of renters since I've lived here, one student stayed the first two years though his roommates changed, one group of young adults had graduated the year before and all decided to stay located in town and would have stayed at least a second year (or more) if the ownership of the rental had not changed and the new landlord booted them, and one rental was a family because the landlord couldn't find college students one year. The landlords around me love having college students as renters, but aren't 100% exclusive that every renter must be a full-time student. While most of the rentals do appear to be for "college students," that's mainly because the students want to be close to the college, the landlords like having college students whose parents co-sign the lease, and frankly, there aren't that many of us non-college students that are crazy enough to live in the middle of all the kids. smile

To me, the vast majority of these cases are just plain rental properties and not transitory for HMDA. If a student wanted to stay long-term, they often could. To consider it transitory, I would want some sort of very clear cut information to justify this. For example, if a university contracts with a hotel to house students for the year because a dorm they intended to build got delayed (though a hotel is already transitory, and that isn't a great example). Apart from some unique and obvious transitory circumstance, I would not consider a dwelling transitory just because they try to usually rent to college students.

That said, the rules aren't that clearly defined so it is important to set your standards and be consistent in how you report things.
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#2261063 - 10/13/21 02:59 PM Re: Transitory or Dwelling Adam Witmer
John Burnett Offline
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Originally Posted by Adam Witmer
That said, the rules aren't that clearly defined so it is important to set your standards and be consistent in how you report things.

That's probably the most important message here if you're messing with this or any other "gray area" in HMDA. That, and be prepared to rethink your standard if your regulator won't accept the argument you make to justify your position. Because at some point it makes no sense to continue a personal battle over a "gray area" definition if it puts the bank at risk of more than an exam citation.
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#2261114 - 10/14/21 08:05 PM Re: Transitory or Dwelling Lizard60
Dan Persfull Offline
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"continues to live on fraternity row"

Fraternity and sorority houses have been specifically excluded. Private rental houses and/or apartment complexes have not.

From the September 2000 CRA / HMDA Reporter

Q. Are nursing homes, dormitories,
fraternity/sorority houses, assisted
living and retirement homes to be
reported on HMDA?

A. Nursing homes, dormitories and
sorority/fraternity houses are viewed as
temporary housing and are not HMDA
reportable since they were not built for
permanent residency. In addition, a
nursing home is more like a hospital
in that it provides medical care, which
is usually constant and extensive.
Assisted living and retirement
homes are viewed as dwellings that
individuals reside in permanently
and are HMDA-reportable. In fact,
in most cases the “home place” has
been sold by the individuals who
choose these homes as their new
“permanent” dwellings.

Previous discussion

https://www.bankersonline.com/forum/ubbthreads.php/topics/1749180/Student_Housing

One last comment then I will put this to rest for my part in this conversation.

That said, the rules aren't that clearly defined so it is important to set your standards and be consistent in how you report things.

Are you going to require your loan officer to verify every rental property the bank finances is or is not rented to a student(s)? If not, then you are inconsistent in your determination. Unless you ask this question then you cannot make a determination on a case by case basis if the structure is or is not a dwelling if you don't have the proper information to make the determination based on what your bank considers and reports as a dwelling.
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#2261117 - 10/14/21 10:42 PM Re: Transitory or Dwelling Lizard60
rainman Offline
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Sometimes you just have to live with the fact that a regulation may be internally inconsistent. Does it make sense that a dorm is excluded but an apartment building rented exclusively to students with the same ameneties (or lack thereof) as the dorm is covered? Probably not. But it doesn't have to make sense.
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#2261119 - 10/14/21 10:48 PM Re: Transitory or Dwelling rainman
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Originally Posted by rainman
But it doesn't have to make sense.

If all regulations made sense, we'd all be out of work.
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#2261128 - 10/15/21 01:30 PM Re: Transitory or Dwelling Lizard60
raitchjay Online
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I didn't say "fraternity house" or "sorority house"....i said "fraternity row"....in my own college experience, i've seen tons of student rentals within shouting distance of fraternity row. And one other type has been explicitly exempted......"transitory housing"....for the record. And now i too am done.
Last edited by raitchjay; 10/15/21 01:39 PM.
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