FHAct prohibits discrimination with regard to residential real estate transactions. What does "residential" mean in this regulation? Consumer purpose type transactions are no problem - home purchase, construction, home improvement, HELOC. However, our main focus is agriculture lending. Our farmers request funds for agricultural purposes but they may have a residence on the property (that the applicant does or will intend to live in,) but the residence is not the primary purpose. If it is a farm purchase the land + other farm buildings usually have more value. Example: applicant wants to buy a poultry farm but also will live in the house. If the applicant wants to improve the farm buildings or have an operating line, and we take the real estate as collateral (with a residence) would that apply? Not consumer purpose but secured by a residence.

I didn't see a definition in the published reg.

§ 100.115 Residential real estate-related transactions.

The term residential real estate-related transactions means:

(a) The making or purchasing of loans or providing other financial assistance -

(1) For purchasing, constructing, improving, repairing or maintaining a dwelling; or

(2) Secured by residential real estate; or

(b) The selling, brokering or appraising of residential real property

(a)(2) is what is catching me. You could have a business or agricultural purpose loan and secure it by "residential" real estate. Is that real estate where the dwelling is the majority of the value of the property? Or is it simply secured by the home the applicant is living in as a "residence", no matter where it is located?

Farm improvements for a 50 acre farm, secured by applicant's home on 2 acres because they don't live on the farm - residential?.
Farm improvements for a 50 acre farm, secured by that same farm and that is where the applicant lives - residential?

For ag purposes, we give more flexibility regarding who does underwriting vs consumer where ATR normally applies on these transactions. There is more natural segregation of duties for ATR with the level of analysis required.

You might search for exemptions - I found the following:

https://www.forbes.com/advisor/mortgages/fair-housing-act/

Fair Housing Act Exemptions
Though the Fair Housing Act applies to most situations, there are some exemptions.

For example, if a dwelling has four or fewer units and the owner lives in one of them, they are exempt from the FHA. However, they would not be exempt under the Pennsylvania Human Relations Act unless the dwelling contained only two units and one was owner-occupied.

Additionally, any single-family housing that’s sold or rented without the use of a broker is exempt from the FHA, as long as the owner is a private individual who doesn’t own more than three such homes at one time. Again, they would not be exempt in the state of Pennsylvania due to the Pennsylvania Human Relations Act.

Housing communities for the elderly are also exempt from the FHA in most cases. In order to not violate the family status provision, it must meet one of several conditions. For instance, HUD must have determined that it’s specifically designed for and occupied by elderly occupants under a federal, state or local government program. Alternatively, it can be 100% occupied by people age 62 or older.

Another option is that the community houses at least one person age 55 or older in at least 80% of the occupied units. The property must also have a policy demonstrating that the intent of the community is to house people age 55 or older.

Finally, religious organizations and private clubs are allowed to give preference to members as long as they don’t discriminate in their membership.

I'm late to this party, but my curiosity is piqued. Why are you looking to exempt ag loans from Fair Housing Act coverage in the first place? Five of the seven FHA protected bases are the same as ECOA... what is unique under FHA is discriminating based on familial status or disability.

Do those really have much relevancy in ag lending that you want to draw a line in the sand for it? Are you seeking to defend taking action on an ag loan because the applicant had kids or was handicapped? I just don't see the big picture here, and my inquiring mind wants to know.

This was where my mind went too. I was also unclear why differences in how the lender underwrites ag purpose v. consumer purpose loans would have any relevance to whether FHA applied.

In our recent FDIC compliance exam, they looked at how we used familial status on commercial and ag loans secured by residential property. Specifically, the calculation of living expenses in a cash flow. They were looking for consistency and any situation where familial status or living expense calculation affected pricing or terms of the loan negatively.