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#2281521 - 02/24/23 03:52 PM Mixed Use - HMDA Reportable?
TryingtoComply Offline
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The West
I'm looking at a commercial loan secured by multi-family property with no liens. Purpose indicates proceeds will be used for cash reserve for property improvement and/or future real estate investments.

Since we don't really know if the funds will be used for improvements to the property, do we need to report this?
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#2281524 - 02/24/23 03:59 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Page 67 (pdf page 161) 2022 GIR:

A Financial Institution may rely on an applicant’s oral or written statement regarding the
proposed use of the loan proceeds. For example, a Financial Institution could use a check box or
a purpose line on an Application form. If an applicant provides no statement as to the proposed
use of the proceeds, and the Covered Loan is not a Home Purchase Loan, cash-out Refinancing,
or Refinancing, a Financial Institution reports the Covered Loan as for an “other” purpose.
Comment 4(a)(3)-1.
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#2281525 - 02/24/23 04:03 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
TryingtoComply Offline
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Hi Dan,

Yes, I am aware of this information, but still would like an answer to my question.

Just found another one that states that proceeds will be used for cash reserves. What about this one?

I'm no HMDA expert - that's why I seeking some assistance.
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#2281528 - 02/24/23 04:21 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
rlcarey Online
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rlcarey
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Galveston, TX
Cash reserves? Who's cash reserves and what purpose - consumer or business? Sounds like your loan officers are doing a very poor job of documenting loan purpose.
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#2281531 - 02/24/23 04:32 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
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The West
These loans are multi-family (apartments). Cash reserves can be used for monthly repairs, larger capital expenditure items like a roof replacement, or money to pay fixed expenses like a mortgage, taxes, and insurance when the unit is vacant, or when rent is late.

Since there is no specific improvement project at the time the loan is granted, I'm asking if loans with this purpose or a mixed purpose (cash reserves and/or future investment opportunities) are reportable.
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#2281534 - 02/24/23 04:37 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
rlcarey Online
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rlcarey
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Galveston, TX
Business purpose loans for other than purchase, refinance or home improvements are not reportable.
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#2281537 - 02/24/23 04:49 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
Thanks!
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#2281541 - 02/24/23 05:46 PM Re: Mixed Use - HMDA Reportable? TryingtoComply
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
From your OP - Purpose indicates proceeds will be used for cash reserve for property improvement and/or future real estate investments.

The quote I gave you gives you a choice to rely on that comment that the proceeds will be used for home improvement or home purchases. The definition for those 2 terms do not specify the funds have to be immediately used for those purposes.

Sometimes you just have to make a business decision based on the information you have.
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