I'm hoping to get some input from others with this loan. Loan to 2 individuals to purchase a residential property with 3 acres of Walnuts and a house. The house will be a rental and the borrower will be farming the walnuts. The borrowers have multiple properties/rentals. We made a 5 year "bridge" loan. In the credit write up we stated "the 5 year term will allow time for the secondary market to adjust toward providing a home loan product for properties like this subject". I'm not sure for HMDA purposes, if this qualifies as a bridge or temporary financing. It's not like there is an exisitng product that the borrower would qualify for, it more like in 5 years they're hoping there's something else to refinance this into? Does anyone have any thoughts as to if this is temporary financining and/or HMDA reportable? I appreciate any and all feedback.

I don't think a 5 year maturity is either a bridge or temporary financing.

Thank you Duchess Skittles! That's what we were thinking as well and we collected the GMI thinking that was the case, but an internal auditor was questioning it, so I wanted some other input.

Loan to 2 individuals to purchase a residential property with 3 acres of Walnuts and a house. The house will be a rental and the borrower will be farming the walnuts.

Three acres will produce a ton of walnuts. When I was a kid I use to help a couple harvest their orchard. Back then it was all by hand and I remember the aches and pains and stains. Yeah, I know I come from the stone age. Heck back when I was kid we still picked cotton by hand. The mechanical cotton pickers didn't come along until I was in the 7th or 8th grade.

Anyway my point is you most likely could exempt this from reporting as an agricultural purpose loan.

Here's the chapter and verse for for the exemption Dan refers to:

A loan to purchase property used primarily for agricultural purposes is not a home purchase loan even if the property includes a dwelling. An institution may use any reasonable standard to determine the primary use of the property, such as by reference to the exemption from Regulation X (Real Estate Settlement Procedures, 12 CFR 1024.5(b)(1)) for a loan on property of 25 acres or more. An institution may select the standard to apply on a case-by-case basis. [Commentary to §1003.2]

Thanks Dan and Jerod - the Ag exemption didn't cross my mind, so many houses here have orchards, I guess I need to pay more attention to that. The projected income from the walnuts is less than the projected rental income of the house, so I'm not sure I'd be able to justify it's primarily for ag purposes.