Commercial Loan

Posted By: Lizz

Commercial Loan - 04/29/20 06:33 PM

We have a commercial participation loan where we are a 35% participant lender involved in this loan. The purpose of the loan is construction perm of a 144 unit apartment buildings. I'm not sure that this is concerned a HMDA reportable loan for us as we are only a 35% participant, where the draws on the loan are directed to the majority lender.
I guess I'm wondering if this is a loan that we need to report on our HMDA since we are only 35% participation.
Posted By: Diane Dean

Re: Commercial Loan - 05/04/20 08:59 PM

From §1003.1, Comment #8:

8. Participation loan. An institution that originates a loan and then sells partial interests to other institutions reports the loan as an origination. An institution that acquires only a partial interest in such a loan does not report the transaction even if it has participated in the underwriting and origination of the loan.
Posted By: Somer

Re: Commercial Loan - 07/16/20 01:38 PM

I would like to Piggy back off of this question. I have a Participation loan where my Bank is the lead Bank. The purpose of the loan is to refinance an existing debt and to also provide financing for the conversion of the property from office space into 20 residential condominiums, of which 4 will be for Affordable housing. Questions.

1. Is this loan HMDA reportable as a refinance
2. If so, do I report the full amount of the loan as the lead bank, or just the Bank's share.
3. Is this project with 20 condos to the developer considered a mulitifamily, with 4 units listed as Affordable.
Posted By: Somer

Re: Commercial Loan - 07/27/20 06:40 PM

Can someone reply to the question above for 07/16/2020.
Posted By: Diane Dean

Re: Commercial Loan - 07/27/20 08:50 PM

If you're paying off another dwelling-secured loan and this loan will be secured by the property being converted, I would say this is reportable as a refinancing. However, if the loan you're paying off was secured by this same building when it was used as office space, it doesn't sound like it was necessarily a dwelling.

You would report the full amount of the loan and then the sale, unless you're keeping the majority interest.

Assuming the 20 condos are in one structure and there are no additional units you're not taking as security, I would say this is multifamily. However, the commentary gives an example that if you're only buying 10 units in a 100-unit complex, it's not multifamily. If 4 units are income-restricted, I would agree those would be reported as affordable housing units.
Posted By: Somer

Re: Commercial Loan - 07/30/20 06:21 PM

Hi Diane,

Thanks for the follow up on the above question. I would like to also provide the following:

The current loan that is being paid off was an existing seven story office building that will be converted into the 20 condominiums and demolition is also complete. Does this change how the loan is reportable? Is it a refinance or is it just a construction loan to build the 20 condos for sale and not reportable under HMDA.

If not reportable under HMDA can I still report the 4 affordable units under Community development.
Posted By: Diane Dean

Re: Commercial Loan - 07/30/20 09:58 PM

If the loan being paid off was secured by the office building that is being demolished, that changes things. In that case, I don't think this is a refinancing. The construction loan may be exempt from HMDA reporting as temporary financing, if it's going to be replaced by permanent financing.
Posted By: Somer

Re: Commercial Loan - 07/31/20 06:14 PM

Hi Diane,

I was thinking that this was exempt from HMDA, but the fact that we are paying off an existing lien and giving the developer construction funds to build the 20 condos to be sold, I'm not sure how to report this loan. Does the paying off the existing lien matter. I believe temporary financing would apply if we were only providing the construction funds to the developer to build and sale the condos.

Let me know what you think.

Thank You..
Posted By: Dan Persfull

Re: Commercial Loan - 07/31/20 07:41 PM

Because the loan being paid off was not dwelling secured that part of the transaction does not come into play.

If you are not providing permanent financing then I think you could rely on the following:


2. Loan or line of credit to construct a dwelling for sale. A construction-only loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. See comment 3(c)(3)-1.ii through .iv for examples of the reporting requirement for construction loans that are not extended to a person exclusively to construct a dwelling for sale.


(f) Dwelling means a residential structure, whether or not attached to real property. The term includes but is not limited to a detached home, an individual condominium or cooperative unit, a manufactured home or other factory-built home, or a multifamily residential structure or community.
Posted By: Somer

Re: Commercial Loan - 08/03/20 02:52 PM

I will go with your suggestions and not report this loan under HMDA as temporary financing. I will report the affordable units under Community Development.

Thanks for your help.