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#2262992 - 11/30/21 05:06 PM HMDA Reportable? Renting to Treatment Center
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Joined: Oct 2012
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San Antonio, TX
We have a loan to a Borrower (entity) to reimburse them for the purchase of a single family residence with a couple guest houses that they will rent out to a 12-bed treatment center for those with moderate/severe mental health issues. The lease will be for at least the entire term of the loan (7 years). If the Borrower themselves were the treatment center or related to it, I can see the case where we would NOT report this loan on the HMDA LAR. However, with it only being rented to such a business, would this now be HMDA reportable, or would it still not be because to whom they are renting?

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#2262996 - 11/30/21 05:28 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
rlcarey Online
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rlcarey
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Galveston, TX
We have a loan to a Borrower (entity) to reimburse them for the purchase of a single family residence

Not a purchase - not a refinance - what would you report it as?
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#2263025 - 11/30/21 09:15 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
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San Antonio, TX
If a lien is not being paid off, it would fall under the category of 4 (Other). That is if it is reportable. What do you think based on the circumstances?

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#2263028 - 11/30/21 09:37 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
raitchjay Offline
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Your loan sounds as if it is business purpose, and "other" isn't an option for business purpose loans.
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#2263030 - 11/30/21 09:43 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
raitchjay Offline
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Or at least.....you say the loan is to an "entity"...which i'm assuming is an LLC or the like....and i don't know how LLC's ever get loans that are for consumer purpose. If my assumption about it being an LLC is correct, then i would think that any loan for the "replenishing of funds" would by definition have to be so that those funds would be available for future business endeavors, thus making the loan business purpose.
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#2263108 - 12/02/21 03:15 PM Re: HMDA Reportable? Renting to Treatment Center raitchjay
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San Antonio, TX
Although they rented the home to this treatment organization (unrelated to them) for a number of years, I imagine they may rent it to an individual in the future for personal/consumer use. Would this still result in it not being reported on the HMDA LAR?

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#2263109 - 12/02/21 03:17 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
raitchjay Offline
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There's no HMDA purpose for this loan. It's not a purchase. It's not a refinance. It's not home improvement. It's business purpose and not eligible for an "other" purpose designation.
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#2263113 - 12/02/21 03:26 PM Re: HMDA Reportable? Renting to Treatment Center Help! Compliance
raitchjay Offline
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I'm going to back up here......i really think you need to determine WHY the entity wants to reimburse its cash. If the answer to that question is "to make future purchases of 1-4 family units", then this could be reportable. IMHO, "replenishing cash" isn't really a reason to get a loan.....
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