We have a loan where the borrower purchased a new home and plans to move into it within the next year (this will become his new primary residence). But for the time being, he will reside in his current primary. The new loan is secured by the dwelling being purchased.

Now we aren't sure what occupancy type to report. Our understanding is that you can only have one primary residence and we are considering that to be the home the borrower is currently living in. We also didn't think it would be considered a second home since currently he does not live there at all and when he does begin living there, it will become his new primary. As of now, we have the occupancy type as investment, consumer purpose but looking into it more, we aren't sure if that reflects the situation correctly either. What is the best way to report occupancy type in this scenario?

Any input is appreciated!

6. Owner Occupancy. Indicate whether the property to which the loan or loan application relates is to be owner-occupied as a principal residence by entering the applicable Code from the following:

It is, is it not? There is no timeframe mentioned.

Yes it is intended to be owner-occupied but we were under the understanding that a borrower can only have one primary home at a time?

That's a Reg. Z definition, and even Reg. Z waffles on that when it comes to certain rescission scenarios. I agree with Randy and would treat as he suggests.

2023 GIR - PDF page167

5.14 Occupancy type
A Financial Institution reports the occupancy type for the Identified Property, using one of the following:

1. Principal residence. An applicant or borrower can have only one principal residence at a time. However, if an applicant or borrower buys or builds a new Dwelling that will become the applicant’s or borrower’s principal residence within a year or upon the completion of construction, the new Dwelling is considered the principal residence for this data point. Comment 4(a)(6)-2. For purchased Covered Loans, a Financial Institution may report the occupancy type as “principal residence” unless the loan documents or Application indicate that the property will not be occupied as a principal residence. Comment 4(a)(6)-5.

Curious as to how your credit team wrote up the occupancy? Also for pricing, did the borrower receive primary residence pricing or higher? (if you tier your rates I guess)

We have a customer buying an investment property but securing the loan with his primary residence. I am indicating on my LAR an Occupancy Status of a 3 but am getting tripped up on the property type as his home is a mobile home but I am not sure what the property type is for what he's purchasing. Is my property type related to the property type securing the loan or to the property he's purchasing? HMDA GIR says to list information for the Identified Property so to me I would report information on the home being taken as collateral. Thoughts?

All this information is regarding the property being used as collateral, or the "Identified Property" according to the GIR. Depending if the borrower is a natural person or not, the occupancy would be coded as 1 (person) or 3 (entity).

Digital page 165 of the GIR
If other data points require the Financial Institution to report specific information about property securing or involved with a Covered Loan or Application, the Financial Institution reports the information that relates to the property for which it has provided the address and location for these data points. Comment 4(a)(9)-2. For purposes of this guide, the property for which the Financial Institution has provided the address and location for these data points is called the Identified Property.

I was always under the impression that if the loan was for a purchase we would list property information about the home taken as collateral but if the loan was for home improvement we listed property information about the home being improved. It seems this isn't neccessarily correct based on the definition of "Identiifed Property" and it being the collateral securing the loan.

I was always under the impression that if the loan was for a purchase we would list property information about the home taken as collateral but if the loan was for home improvement we listed property information about the home being improved.

That changed with the 2018 revisions. Now it is based on the property that will or is proposed to secure the loan.

From 1003.4

(9) The following information about the location of the property securing the covered loan or, in the case of an application, proposed to secure the covered loan:

if the loan was for home improvement we listed property information about the home being improved

If this is how you have been reporting HI loans then you may want to do a LAR scrub.

Thanks for your responses.