We have a commercial loan secured by 3 rental properties (originally HMDA reported) that is being paid off by a new commercial loan secured by these same 3 rental dwellings AND the addition of a 4th dwelling - customer’s primary resident (Home).

How do we report the occupancy? The original loan was reported as “Not Owner Occupied” (Code-2)
But now… this is both

Report the occupancy for the property that you are reporting geocoding information for.

Assuming you don't have home improvement or a new purchase going on in this refinancing, (in which case you would show the property location and owner occupancy for the dwelling being purchased or improved)my reading of things is that you would have the choice of making one entry and choosing which dwelling to show owner occupancy and property location for OR use multiple entries, showing owner occupancy and property location for each and allocating loan amount amongst the properties.

Additional question based on new information I just discovered.

The customer is getting Cash Out to build a new rental dwelling. Although, this new dwelling is not going to secure this loan should be irrelevant, however, will this now be considered a HMDA reportable purchase opposed to a refinance?

I don't see any discussion in HMDA about combined refinancing/construction (or construction to perm)...only combined refinancing/purchase or refinancing/home improvement. Long story short...IMO it's still just a refinance. Now i'll wait for somebody to shoot that down.

Construction/permanent loans (and the permanent financing that replaces construction only loans) are purchases for HMDA. Therefore, this loan would be a combined purchase/refinancing, which is reported as a purchase. It doesn't matter that the dwelling being constructed isn't part of the collateral pool.

Would we consider this as a "construction loan"?
The majority of the funds are for the refinance of the commercial loan. Thus, we assume the purpose is refinance. However, because a portion of new money is being use to build a rental property which there will not be a later "take-out perminant financing" on, but will be "a combined construction/permanent loan" wouldn't that be reportable?

From GIR (D-5)
Construction and permanent financing.
A home purchase loan includes both a combined construction/permanent loan and the permanent financing that replaces a construction-only loan. It does not include a construction-only loan, which is considered “temporary financing” under Regulation C and is not reported.

I'm totally confused....

What diputs states is the reason i said i believe it's a refinancing. Again, i see nothing in HMDA that states if you have a refinancing where PART of the proceeds are used for construction that you have a purchase transaction. I know construction-perm and loans converting temporary construction to long term financing are reported as purchases. I myself wouldn't look at this as a "permanent" construction loan. The funds to build the dwelling are taken from the equity in the other dwellings. I don't see this as a construction-perm loan. The long term financing that is there would be there whether there was construction or not.

That answers my quest HMDAGAL. I posted before I read you response.

Thank you

But is it really construction to perm? The amortization that you have there, i'm thinking, would be that way regardless of whether you had this cash-out to build this dwelling. Just has me curiuos now.

If we are reporting the loan as a "Purchase" and the lien is a "first" on the existing rentals and primary residence how do we report the lien status?

If it is reported as a refinance then I presume we report lien status as first (code-1)

However, I tend to lean... to reporting this as a purchase. But raitchjay makes a valid observation.

What do I do....?

You are going to report the lien status of what you have as your collateral--the existing dwellings. Sounds to me like it's going to be a first lien regardless of how you classify it.

raitchjay,
LO tells me its a 5 year fixed on a 10 year AM commercial loan.

GIR (page 29)
Refinancing.
A refinancing is any dwelling-secured loan that replaces and satisfies another dwelling-secured loan to the same borrower. The purpose of the loan being refinanced is not relevant to determining whether the new loan is a refinancing for HMDA purposes. Nor is the borrower’s intended use of any additional cash borrowed relevant to determining whether the loan is a refinancing, though the borrower’s intended use of the funds could make the transaction a home improvement loan or a home purchase loan.

I guess the question is... If cash out to build a dwelling is considered a purchase if the loan is not temporaray financing.
Also, the sections from the GIR quote that reads:
though the borrower’s intended use of the funds could make the transaction a home improvement loan or a home purchase loan.
Makes me think "Purchase"...
Any comments?

I may be wrong here, but i find this interesting and learn stuff this way...here's how i see this: From HMDA: "A home purchase loan includes both a combined construction/permanent loan and the permanent financing that replaces a construction-only loan. It does NOT include a construction-only loan, which is considered temporary financing and is not reported." Also, I see nothing in the language under Property Location that talks about combined refinancing/construction...only combined refinancing/home purchase and combined refinancing/home improvement. I don't know how you would isolate the construction part of this transaction out and say "if this were the only part of this loan that was getting made, you can see where we have permanent financing". Would your bank have made just a loan on the equity in the rental properties (without refinancing the entire thing) as a construction/perm. for the new dwelling? If your practice is to do construction-only loans in that scenario, again, i am not sure that the existence of the much larger debt in the refinancing constitutes your "perm" financing for the construction only loan. Just my opinion...and as much a hypothesis as anything else.

Diputs....i would not say yours or hmdagal's interpretation is "wrong". From my vantage point...i see nothing in Reg C or the GIR that really specifically addresses this. If the cash-out was to actually purchase an existing dwelling, then to me it's obviously a no-brainer. But cash-out to construct a dwelling? Maybe my argument/idea about what constitutes perm financing is mistaken. I think of construction-perm as a free-standing, on its own type transaction. With this being lumped in with this big refinancing, it muddies the waters for me somewhat.

Here is another part i find interesting and why i'm not sure you can consider this a "construction-perm" loan: you aren't (i'm assuming) funding this as a construction loan. There wouldn't be a "construction phase" and a "permanent phase" because of the refinancing of the other commercial properties. And it would not qualify under "permanent financing that replaces a construction-only loan", because this is the only loan there is.

FWIW, our shop would report this as:

Purchase (purpose of new proceeds), 1st lien, non-owner occupied (majority of collateral), and the location of whichever collateral property is listed first.

Jay, I'm looking at 'construction' as a loan purpose, which GIR tells us is reported as a purchase for HMDA. It sounds like you're considering it to be a loan type. The way this loan is structured, it is the permanent financing for the construction. IMO, this is a purchase.

No...i'm thinking of purpose as well...i'm just hung up on the "construction/permanent" definition vs. construction only. The GIR says that a COMBINED construction-perm and permanent loans that convert construction only loans to long term financing are reportable as purchases. I just struggle with calling this scenario we're discussing as a "construction-permanent" loan if there is no construction phase and no permanent phase.

Not all construction loans have a temporary phase. Suppose I took out an equity loan on my primary residence to build a vacation home. The loan is fully disbursed and regular monthly payments will start in 30 days. Is this not a purchase for HMDA?

Maybe i need to see a definition of "combined construction/permanent" loans. (I have re-written my ideas in this post about 4 times now....i think i will have to just say i DO see your point.) I think the thing that throws me the most is the above scenario (or an even more involved one like we sometimes have) where the construction is almost incidental to the actual refinancing, but by these rules would cause the entire transaction to be labelled a "purchase".

I don't know that it's in writing anywhere, but I had an examiner explain it to me this way:

HMDA is purpose driven. The purposes are ranked 1) purchase, 2) improvement, 3) refinance. So if you have a single loan that involves more than one purpose, you report it as the higher ranked one.

Yes..i agree with that and i know it's purpose driven. That's why i guess in my mind where you have a scenario where say you have 7 dwellings securing a loan, plus 8 pieces of commercial property, 2000 acres of land, livestock, and a partridge in a pear tree on a loan of $3 million, and $25k is part of the new money to construct a shack, it seems silly to me to report this "refinancing" as a "purchase". But i guess i agree that's what we are supposed to do. (I mean for a purpose-driven Regulation....don't they want to know what the loan was REALLY about? It wasn't about building the shack...it was about REFINANCING all the other debt.)

Nobody ever said it made sense.

Heck, if the regs made sense, most of us wouldn't have jobs.