I am looking at a loan made so the borrowers could buy into a Senior Aparment complex which is now their primary residence. The collateral is their previous residence which they are attempting to sell. The loan is coded as an owner occupied, multi-family purchase, showing no lien. That doesn't seem right, but after looking at if I've decided I am only confusing myself so I'm hoping for some more experienced opinions.

For what it's worth the home used for collateral is owned by their trust.

My first question - do they own the apartment?

Trust issue with old home is immaterial to this discussion.

Second, the answer to skittles question will determine if it's multi or 1-4. Is the single apartment deeded in the borrower's name or did they 'buy an interest' more like a time share that reverts on death?

Third, what do you mean by 'no lien'?

Also, is this a temporary loan? Will they be getting permanent financing or will this be paid off when the original home is sold.

I checked with the loan staff. They don't own the apartment.

They put down no lien because there is no lien on the new residence. In my mind that can't be right since there we have a lien on the other dwelling.

Kaybee - It isn't temporary.

I don't understand. If they are not going to own the apartment, what exactly is the down payment for??? If they are not going to have some ownership in the apartment, it doesn't sound like a HMDA reportable transaction.

I agree with Randy. A 'purchase' loan has to be to purchase residential real estate and secured by residential real estate (i.e. their existing home). Now if you had to refinance part of their existing real estate in this transaction - that might be different.

If the "down payment" is an entry fee and they just pay a monthly fee, this is not a purchase.

Ditto, Kathleen. That's what I was reading into the OP's post as most likely being the case. I've heard of some of those around here. As soon as their current residence sells, you have an unsecured loan. The people will be living in the complex but they're not purchasing an individual unit so it's not HMDA reportable at all.