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Is this Commercial Mortgage Loan HMDA Reportable?

Question: 
We have a commercial loan to an LLC for a purchase/construction loan for 18 months. the loan will be paid off when the property is sold. would this be HMDA reportable? if so, would we report this as a purchase?
Answer: 

Randy Carey—

Official Interpretation
Paragraph 3(c)(3)

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.

Answer: 

Dan Persfull—

Randy responded with the appropriate cite from the regulation concerning a construction loan only to construct a dwelling for sale.

However, a loan for a purchase/construction needs additional clarification. Are they purchasing a dwelling and renovating it for resale, are they purchasing the dwelling to raze it and construct a new dwelling for resale? If yes then the loan is not exempt from HMDA reporting.

Answer: 

Randy —

Good point Dan. I never thought about that. It might be what we call "a tear down, throw up."

First published on 01/26/2025

Last updated on 1/28/2025

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