I have a HMDA question regarding occupancy type. We have a borrower that is using their primary residence to secure a loan to term out commercial debt. The employee responsible for reviewing HMDA states that the occupancy code should be 3-investment since the borrower is a business. However, from my perspective, the security property used by the applicant is their principal residence and we should report a 1. Is that correct of have I missed interpreted something.

I should also note that the business is owned by both the husband and wife and that is why the primary residence is being used as collateral.

Is the loan purpose to purchase, home improvement or refinancing? Those can be reportable for a business. And what is the borrowing entity type?

If the borrower is an entity, it cannot be the entity's primary residence, regardless of who the owners of the entity might be.

If the borrower is a business and this is a commercial loan, the only permissible purposes for reporting are purchase, refinance and home improvement. Is the debt being refinanced and was originally secured by the personal residence, or any dwelling, and in the name of the business?

rlcarey, that makes sense. Thanks!

Hello, I have a similar scenario. The HMDA property is the Co-applicants primary residence, but the applicant is the business entity. In reading the regulation it always states "applicant or borrower" and does not reference Co-applicant. So I am assuming I will report code 3 - Investment property based on the "applicant"?

Thanks

HMDA just does not contemplate the fact that you can have two applicants and one applicant is a legal business entity and one is an individual. In who's name is the property vested?

I agree with Randy. If the answer to the question on vesting is that the property is indeed owned by the individual, i would code it as a primary residence. While you are correct that the wording of 1003.4(a)(6) uses "the applicant or borrower" it goes on in the commentary to talk about " AN applicant or borrower". ETA: (The co-applicant or co-borrower may not be THE applicant or THE borrower, but they are AN applicant or A borrower.) That's how i would interpret it anyway.

Vested in Co-applicant name (Natural Person).