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#2279324 - 12/30/22 03:12 PM Cross Collateralization - Total Units
DixieLee Offline
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Joined: Mar 2007
Posts: 37
Our commercial promissory note includes cross collateralization language; however, the value of dwellings included from cross collateralization is not used in the CLTV calculation for underwriting. Are we correct in not including these cross collateralized units in the calculation for Total Units reported for HMDA?

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#2279372 - 01/03/23 06:10 PM Re: Cross Collateralization - Total Units DixieLee
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
(31) The number of individual dwelling units related to the property securing the covered loan or, in the case of an application, proposed to secure the covered loan.

6. Property. A financial institution reports the combined loan-to-value ratio relied on in making the credit decision, regardless of which property or properties it used in the combined loan-to-value ratio calculation.


The properties used to calculate the CLTV relied on has no correlation to the number of dwelling units securing the loan.

If the loan is secured by additional dwelling units as a result of the cross collateralization clause then why would those units not be reported?
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2279393 - 01/04/23 01:59 PM Re: Cross Collateralization - Total Units DixieLee
Melissa S Offline
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Melissa S
Joined: Jan 2015
Posts: 374
Maine
Our documents also contain cross-collateral language as default language. The underwriting for the loan being reported, however, does not rely on, nor include, any information on possible other collateral through cross-collateralization. All decisions on the loan being reported are based on the direct property collateral to that loan alone.
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#2279394 - 01/04/23 02:18 PM Re: Cross Collateralization - Total Units DixieLee
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The underwriting for the loan being reported, however, does not rely on, nor include, any information on possible other collateral through cross-collateralization.....All decisions on the loan being reported are based on the direct property collateral to that loan alone.

Unless you can show something within the regulation, commentary, FIG or GIR that exempts dwelling units securing the loan by a cross-collateralization clause what is your regulatory basis for excluding them?
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2279395 - 01/04/23 02:20 PM Re: Cross Collateralization - Total Units DixieLee
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
HMDA appears to be sort of similar to flood insurance. IF you have them cross collateralized - they are all collateral on every loan. As Dan said, there are no exclusions in either regulation for cross collateralized collateral - relied upon or not.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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