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#487347 - 01/23/06 07:14 PM
HMDA Question 2nd mortgage
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Gold Star
Joined: Jun 2002
Posts: 310
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We have a second mortgage on ag land (+100 acres) where money was borrowed to update other buildings on the property for resale. Since there is a dwelling on the mortgaged property, is this a HMDA transaction? Any advice is appreciated. It is investment property so it has a business purpose.
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#487348 - 01/23/06 08:17 PM
Re: HMDA Question 2nd mortgage
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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Sounds like you have a home improvement loan.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#487349 - 01/23/06 08:25 PM
Re: HMDA Question 2nd mortgage
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Joined: Apr 2003
Posts: 933
New York State
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Is any of the money being used for improvments made to the residence?
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#487350 - 01/23/06 08:32 PM
Re: HMDA Question 2nd mortgage
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Gold Star
Joined: Jun 2002
Posts: 310
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It is to improve outbuildings on the farm site not the residence. Thanks for the replies.
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#487351 - 01/23/06 08:35 PM
Re: HMDA Question 2nd mortgage
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Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
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Quote:
It is to improve outbuildings on the farm site not the residence. Thanks for the replies.
Unless this is a refinance (paying off a lien on the property at your bank, and replacing with another), I would say that it is not HMDA reportable. You are not purchasing, improving or refinancing a residential dwelling. BUT, if you do refinance this loan, secured by a lien on the dwelling, it is then HMDA reportable.
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#487352 - 01/23/06 08:46 PM
Re: HMDA Question 2nd mortgage
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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2. A home improvement loan is (a) any dwelling-secured loan to be used, at least in part, for repairing, rehabilitating, remodeling, or improving a dwelling (or the real property on which the dwelling is located) or (b)any unsecured loan to be used, at least in part, for one or more of those purposes that is classified as a home improvement loan by the institution.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#487353 - 01/23/06 08:50 PM
Re: HMDA Question 2nd mortgage
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Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
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Quote:
2. A home improvement loan is (a) any dwelling-secured loan to be used, at least in part, for repairing, rehabilitating, remodeling, or improving a dwelling (or the real property on which the dwelling is located) or (b)any unsecured loan to be used, at least in part, for one or more of those purposes that is classified as a home improvement loan by the institution.
Dan, you and I are just going to butt heads today. That's OK, keeps life interesting. I guess that if the customer is borrowing $50,000 to improve the barn and we are taking a mortgage on the entire farm property, I would not classify it as HMDA reportable. Now, CRA is a different story.
Also, remember the "mixed-use property" rules. If the proceeds are not being used primarily to improve the residential portion, not HMDA.
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#487355 - 01/23/06 08:59 PM
Re: HMDA Question 2nd mortgage
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Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
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Quote:
I don't do CRA reporting. 
Lucky devil. What about the mixed use rules. Will you give on that? 
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#487356 - 01/23/06 09:02 PM
Re: HMDA Question 2nd mortgage
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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Nope. Mixed use rule examples are based on a single structure being used as residential and business, not multiple structures.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#487357 - 01/23/06 09:07 PM
Re: HMDA Question 2nd mortgage
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Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
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OK, you've made my day. I still wouldn't report it.
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#487358 - 01/23/06 09:12 PM
Re: HMDA Question 2nd mortgage
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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If you are a CRA reporter than I would say you could have an option to report it as a small farm loan. But I don't deal with CRA so my answers are always based on Reg. C. I know just enough about CRA to get myself, and someone else, in trouble.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#487361 - 01/23/06 10:35 PM
Re: HMDA Question 2nd mortgage
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Power Poster
Joined: Dec 2002
Posts: 3,841
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Quote:
Quote:
I try to avoid controversy,
Gees, that's no fun. 
Unless all the properties were on one parcel I would not report it either. However, if all the property were on a 100 acre parcel then I do think it would fit the HI definition.
Trust me, I find plenty of other places to have that kind of 'fun'  . I can see your point, but I would argue that even if they are on the same parcel, an upgraded milking parlor really isn't improving the dwelling or the land it sits on.
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#487362 - 01/24/06 02:32 PM
Re: HMDA Question 2nd mortgage
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Diamond Poster
Joined: Mar 2003
Posts: 1,035
OK
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FWIW - I would report it based on the definition that Dan gave that includes "the real property...". If it was a house on an acre lot and they were improving a storage building, etc. then we report those so the only difference I see is that it has more acrage and the only place it cites an exclusion due to large acreage is under a home purchase which this would be HI.
As far as counting on CRA as small farm, the Final Rule came out on that last year that says you can double count for CRA and HMDA for loans that are small business or small farm. See Federal Register Vol. 70 No. 58 - 3/28/05.
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