We have an individual who currently owns (free-and-clear) a piece of vacant land, and we have given him a "construction-to-perm" Mortgage to construct 2 buildings on this same piece of land. Building #1 will be a 2-story building with a 2-car garage and 289sq ft retail office space on the 1st floor, and a 896 sq ft 2-bedroom apartment on the 2nd floor to be rented out (i.e. building is primarily residential use based on sq footage). Building #2 will contain 6 storage units (1944 sq ft total)to be rented out (i.e. 100% business use). I'm not sure how or if the Mortgage is HMDA reportable. Is it considered business purpose (by treating the 2 buildings as "one building", making it predominantly business use when you combine the square footage used for business purpose)and therefore Not HMDA reportable, or because it is two separate buildings, even though they are at the same address, do we have to report it as a "home purchase" of a "1-4 family dwelling" based on the one building that has an apartment (which, on its own, the building's use is primarily residential based on square footage)??? Any help would be most appreciated. Thanks!!!

I'm leaning towards not reportable due to the primary portion of the buildings/land being business purpose.

I would agree with Rizzo - not reportable.
Just fully document the rationale for your decision & I would think you would be o.k.

Sounds good. Thanks to you both!!

With out actually looking at your file:

I'd report it on both the HMDA LAR (Home Purchase, 1-4 Family) and on the CRA Small Business Register (Type 01, Rev Code 3).

Same AppIds,same amounts.

No - the correct reporting for the CRA LR will depend on the Call Code assigned to this loan. If the Call Code is 01e,(secured by non-farm/non-residential property) then it is reported on the CRA LR presuming the loan amount is $1Million or less. You are not allowed to double report a loan on CRA and HMDA with the exception of multi-family affordable dwelling loans that can be reported on HMDA and as Community Development.

(Caveat here about how a Retirement Home is supposed to be reported according to the Call Report instructions and the CRA instructions which tie directly in to the Call Report instructions. A Retirement Home is considered non-farm/non-residential on the Call Report and thus should be reported on the CRA LR if $1Million or less, and should also be reported on HMDA if used for purchse, refinance or improvement. However, I've yet to find a regulatory agency that will actually look at this issue and I get tired of everyone following the party line about no double HMDA/CRA reporting. Follow the dang regulation and stop making stuff up!)

If the Call Code is 01a (construction, land development and other land loans), then the loan cannot be reported on the CRA LR, and may or may not be reportable on HMDA.

If the Call Code is 1C2(a) or 1C2(b),(secured by 1-4 family residential property) then you would not report it on the CRA LR, and would have to consider reporting on HMDA.

Remember two things about all of this:

1. Neither CRA nor HMDA should determine the correct Call Report code. The loan should be classified correctly, and you may need to contact your regulatory agency for guidance if you are not sure. However, the Call Report code does determine what is reported on the CRA LR, but does not have the same effect on HMDA.

2. You do not have to simply rely on square footage to determine primary use. You can also rely upon revenue generated by the residential vs. the commercial. I would be willing to venture a guess that the commercial space would generate greater revenue than the residential.

[quote=Bonnie You are not allowed to double report a loan on CRA and HMDA with the exception of multi-family affordable dwelling loans that can be reported on HMDA and as Community Development. [/quote]

Bonnie, I disagree with this. Because of the changes to HMDA on reporting refinanced loans there are times you will have a loan on both. If I have an ag loan that is refinance and has a house on it then it gets reported under CRA (assuming this is the first time it is being reported this year) and now on HMDA (even though it has nothing to do with the purpose of HMDA)

The really need to coordinate the regs so you don't have these conflicts.

J, a couple of questions.

1. What is the collateral of the loan?
2. How does your bank treat other loans like this?
Do you use revenue or square footage (examiners like to see consistence

KC - I completely agree with you, and I also disagree about the agencies expressed prohition on double reporting. This prohibition has been stated by more than one representative of a regulatory agency. I have pointed out the situations where the property falls under the reporting rule for CRA as a small business (or small farm) loan and also is reportable under HMDA. But I got an answer back that if the loan is reported on HMDA LAR, then you're not allowed to report it on the CRA LR.

However, when I asked to see the regulatory citing that states that, I got silence.

The prohibition does not exist other than in the minds of the examiners, but as we all know, if enough regulators believe it, then it becomes reality.

Now, if we can just get all of these examiners to believe in world peace......

Wouldn't be fun if just for once we could make up all the rules.