Commercial/Business - CLTV and cross collateral

Posted By: Yogi Bear

Commercial/Business - CLTV and cross collateral - 02/12/22 08:42 PM

This is our first year reporting all the extended data. We are struggling with our commercial loans and CLTV.

Example: The approval will state a signal "dwelling" as collateral. The rub is that on the collateral analysis, all of the collateral the borrower has with us is listed and the Gross total loan amount is recommended based 75% of the total collateral (real property and non real property).
The Notes all have cross collateral langauge in them.

We have been looking at this as we need to use all the collateral on the analysis and not just the what we would call direct collateral described on the approval.

Are we correct in looking at the total collateral for each loan that is reportable or just the "direct" subject property?
Posted By: rlcarey

Re: Commercial/Business - CLTV and cross collateral - 02/13/22 01:21 PM

Sounds to me that this method of underwriting would fall under this comment.

4. Transactions for which no combined loan-to-value ratio was relied on. Section 1003.4(a)(24) does not require a financial institution to calculate the ratio of the total amount of debt secured by the property to the value of the property (combined loan-to-value ratio), nor does it require a financial institution to rely on a combined loan-to-value ratio in making a credit decision. If a financial institution makes a credit decision without relying on a combined loan-to-value ratio, the financial institution complies with ยง 1003.4(a)(24) by reporting that the requirement is not applicable since no combined loan-to-value ratio was relied on in making the credit decision.
Posted By: Yogi Bear

Re: Commercial/Business - CLTV and cross collateral - 02/13/22 05:41 PM

Thank you for your thoughts. We may have been over thinking, which is not hard to do with HMDA.