Hi All. I have a commercial borrower that took out a loan a few years ago with the purpose to buy a business. The loan was collateralized in part by the personal residences of the owners of the borrowing entity. This loan was not reported as the purpose was not for the purchase, refi or improvement of a dwelling. The value of the residential properties at that time was 47% total gross collateral value.

This year, the borrower came back for additional funds to purchase more equipment. In discussions with the loan officer, it was decided to refinance the existing debt with the new request in order to release one of the collateral residences.

Does it matter that the remaining residence is now only 28% of the gross collateral value with everything else being equipment and business assets, or is this A REFI IS A REFI.

The borrower is the same. I want to think that in the past I have had a similar situation and it was not reported, as the primary purpose of the loan was not residential related, but commercial purpose.

I am not sure how you could not report it this time around:

5. Purpose—business or commercial purpose loans. If a covered loan primarily is for a business or commercial purpose as described in § 1003.3(c)(10) and comment 3(c)(10)-2 and is a home purchase loan, home improvement loan, or a refinancing, § 1003.4(a)(3) requires the financial institution to report the applicable loan purpose. If a loan primarily is for a business or commercial purpose but is not a home purchase loan, home improvement loan, or a refinancing, the loan is an excluded transaction under § 1003.3(c)(10).

Thanks, rl. Every year I find myself second guessing something else.