We've committed to lend $1,000,000 to a non-profit to buy/rehab homes to low/moderate income borrowers. The LO structured the committment as follows.

$1,000,000 signed commitment - Bank did not book the commitment on the loan system as a loan.

As the non-profit buys homes, they will request funds & sign a note. Collateral will be the home purchased.

I think that I need to report each individual loan as a CDL and not report the $1,000,000 commitment. Is this correct?

Thanks.

I am wondering if these are indeed CDLs. Is this permanent financing, if yes they would be HMDA reportable. If it is temporary fianncing then you can report as a CDL. Our examiner wanted us to report these in the year they were funded.

I got so caught up in the CDL thought process, that I forgot about HMDA.

The non-profit will buy/rehab the homes or construct new homes for the LMI borrowers. We will be repaid when the low/moderate income borrower receives a loan to purchase the house from the non-profit.

Now that I think about it, I'll need to report each individual loan on the HMDA - LAR.

Correct?

donna, is this temporary financing?

It sounds as though you are lending to the non-profit and the LMI borrowers will get the perm. financing on their own. This would be temporary financing and not reportable for HMDA.

IF this is the case sounds as though you would be able to report each individual loan as a CDL.

I followed up on the temporary financing question & finally have the full scoop from the LO.

Non-profit will buy a home & use it to secure the loan with us. Non-profit will fix up the home & sell it to the LMI customer. We will be repaid when the non-profit sells the home to the LMI customer, which will typically be 3-6 months. Basically, the non-profit is buying & flipping the homes.

For each customer that they do this for, the non-profit will sign an individual note with us & pledge that house as collateral.

Now that I have this information, I think they're HMDA reportable & the temporary financing exception doesn't apply.

Correct?

Thanks.

I'm still unclear on what the use of the funds are but I guess either way, if they are purchase money or for improvements, then yes, it would be HMDA reportable.

Agree with BS....HMDA Reportable

Short Term vs. Temporary Financing
“A loan is not temporary financing merely because its term is short. For example,
a lender may make a loan with a 1-year term to enable an investor to purchase a
home, renovate it, and re-sell it before the term expires. Such a loan must be
reported as a home purchase loan.”
Some banks have declared all loans of less than a certain term (for instance 1
year or 2 years) as temporary financing. This has never been the intent of
HMDA and the Q&A puts this misunderstanding to rest. A short term loan is still
reported, if its purpose is to purchase, improve or refinance a dwelling.
A good example of a reportable, short term loan is home improvement financing
for 1 year. If the loan is repaid over 12 monthly installments, this loan is not
temporary and should be reported.
Another example of short term financing are “splash and dash” or rehabilitation
loans. This where an investor will purchase a home and then renovate it to resell
for a profit. At the time of application, the purpose of the “splash and dash” was
to purchase the investment property; therefore, making it HMDA reportable (as a
“purchase”). The fact that the owner plans to renovate by gutting the inside and
installing additional amenities does not exempt this transaction from being
reported and classified as a construction loan. Remember, you can only
construct a home once, from there you are improving the dwelling.


http://www.bankerscompliance.com/~bcc/assets/files/articles/HMDA%20and%20Temporary%20Financing.pdf