Community Development and HMDA reportable?

A large scale goat dairy operation borrows $800,000. They manufacture soaps and lotions from the goat’s milk. $300,000 is being used to build more barns on the property to expand the milking operation and provide a kid barn (housing for the young goats). $500,000 will be used to pay off the previous mortgage. Included on the property is a substantial and separate dwelling. Due to this fact, under current HMDA rules, this loan would be reported on the HMDA LAR as a refinance (Replacing a dwelling secured debt obligation with another dwelling secured debt obligation). This loan is currently Call Report Coded as 1A2 – Other Construction, Land development, and other land. However, the note is set up on a 15 year term. $300,000 was allowed to drawn down during the construction phase. Should this loan have been call report coded as 1B (RE Secured by Farmland) due to the nature of the collateral (majority being a dairy operation)? Because expansion of the dairy will also will result in the creation of 3 to 5 jobs paying approximately $10/hr, couldn’t I also list this loan as Community Development? My regulator suggested that I should apply the “mixed use property rule” to determine that this loan is not HMDA reportable. I have never seen the “Mixed use rule” applied unless the dwelling and the business were in the same building.

Mixed use applies to more than a single building. It can apply to a property with multiple buildings/uses as well, just as yours is. I have always used it this way (I started in commercial lending) and recently (as have some others) confirmed this with the CFPB.

Your loan is over $500,000 so will not be small farm, so you could report for community development/jobs creation.

And yes, your loan should be coded as secured by farm land.

Thank you, Kathleen.