I have a mixed use property question. If I have a application for a mixed use property that was denied or withdrawn before the appraisal what can I use for my mixed use property test. The presentation says the loan is for a B&B and the property contains a small apartment for the owners residence. In this situation can I just be reasonable?

I would treat this as primarily commercial and not report.

It would be dependent on the HMDA purpose. You can use an analysis of the square footage of the commercial vs. Residential if the purpose is to "Purchase" the property. However, if the request is a refinance, then the the GIR states that the purpose of the loan being refinanced is not relevant to determine whether the new loan is a refinancing for HMDA purposes.

So if it is a mix-use commercial/residential property and it meets the definition of refinance under HMDA, it would be reportable.

I disagree. If your initial mixed-use test reveals primarily a commercial purpose (versus a residential purpose), then it's not a dwelling for HMDA purposes. So when you refinance the loan, you aren't extinguishing a "dwelling"-secured loan with a dwelling-secured loan. Now if your refinance were of commercial property with a separate dwelling, then yes, reportable.

This information was provided to me from the HMDA helpline based on information from the GIR. There isn't a mixed-use carve out in HMDA for Refinances. They advised me a refinance would be reportable if both loans were secured by the dwelling (as defined by the regulation) regardless if the commercial space was of greater size than the residential space. Chuck mentioned that there is an apartment for the owners residence.

Below are excerpts from the Commentary for Purchase and Home Improvement. There isn't anything for Refinance.

In Reg. C Commentary 203.2 (h) Home Purchase Loan.
#2 Mixed use property: A dwelling, secured loan to purchase a property used primarily for residential purpose(for example an appartment building containing a convience store)is a home purchase loan. An insitituion may use any reasonable standard to determine the primary use of the property such as by square footage or by income generated.

Commentary 203.2 (g) Home Improvement.
#4 a loan to improve property used for residential and commercial purposes is a home improvement if the loan proceeds are used primarily to improve the residential portion of the property...

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Opinion only

"A home purchase loan means a loan that is both secured by and made for the purpose of purchasing a dwelling." When faced with a mixed-use property, we are to employ the mixed-use test. If the mixed-use test comes back as primarily commercial use we don't report it as a purchase loan. Therefore, it must not be a "dwelling" for HMDA purposes, or else we'd report it, right? So how can the refinance of a loan that is not secured by a "dwelling" under HMDA rules meet the definition of a HMDA refinance: "Refinancings are reported under HMDA only if both the existing obligation and the new obligation are secured by liens on dwellings."

Under the HMDA Helpline's reasoning, if we were faced with a loan to be secured by a horse barn with 40 stalls and a small living quarters, we would exempt it from reporting if it were for a purchase, but then if we were to refinance the loan we'd report it?

According to them yes.

They apply the same reasoning for Agricultural loans with a dwelling. You don't report those if they are a purchase, but you would if they are a refinance. Because the purpose of the loan being refinanced is not relevant to determine whether the new loan is a refinancing for HMDA purposes as long as the new loan replaces and satisfies another dwelling secured loan to the same borrower.

For example:
Customer as for a loan to purchase a 30 acres with a dwelling HMDA GIR states that a loan to purchase property used primarily for agricultural purposes is not a home purchaseloan even if the property includes a dwelling. But then the customer comes back 5 years later to refinance that property it would be reportable.

Same is true for a customer who request a loan to purchase a multi use property. Property with primary commercial and a single apartment for the shop owners. HMDA states that the financial institution may use any reasonable standard to
determine the primary use of the property,such as by square footage or by the income generated. if the majority of the sqft is for commerial purpose then it wouldn't be reported. But if the same customers come back 5 years later and want to refinance that loan, the it would also be reported as a refinance just like the other example.

I agree on the Ag. use exemeption as that is specifically stated. I don't see the relevance of the "purpose of the loan" citation for refinances. I'm not saying they aren't HMDA reportable because of the loan purpose, i'm saying they're not reportable because they aren't "dwellings" for HMDA purposes.

So, HMDA Help would say if we do a loan to purchase the Empire State Building, and there's a janitor's quarters in there, we can exempt the purchase loan, but if we refinance it, we have refinanced a "dwelling-secured" loan with a "dwelling-secured" loan? I'm not sure i can buy that. The Ag. exemption doesn't present the same dilemma to me because in that case, there is unquestionably a dwelling involved.

I just had one of these properties that I sent the scenario to the HMDA helpline. Commercial building (two units) with an apartment upstairs on the second floor. We were refinancing the entire building, which included the apartment.

They said yes that it would be a refinance for HMDA and cited the exact defintion of Refinance that I put in the prior post.

I don't see how HMDA Help can make their definitions jibe with what i quoted above: Definition of a home purchase: "A home purchase loan means a loan that is both secured by and made for the purpose of purchasing a dwelling." If the mixed-use test leads us to not report (with the implication being on mixed-use property that those with a primarily residential purpose ARE dwellings and those with a primarily commercial purpose AREN'T), it must not be a "dwelling" for HMDA purposes, or else we would have had to report it, right? If it's not a "dwelling", it's not a "dwelling", even if refinancing the loan. For home improvement, since it gives us a specific instance if the improvements are used primarily to improve the residential portion of the property, then you have a specific reason to report.

Maybe others will agree with their logic, but i can't.

I'm with RJ on this one. If a building doesn't meet the definition of a dwelling, the refinance of a loan secured by that building would not be reportable.

There are plenty of people here who have been given incorrect answers by HMDA help...

Can the same logic be used for agriculture loans? For instance, the Bank approves financing for improvements to the barn. The existing loan includes the single family residence and the new amount will be added to the current balance of the existing loan.

Applying the Mixed-use property scenario, improvements are being made to the barn so the proper coding on the LAR for loan purpose would be refinancing, because the dwelling is not being improved. Is that a correct application of Mixed-use?

Or should the bank list the new loan on the LAR as a home improvement since the improvements are being made to real property?

IMO, mixed-use only comes into play when you are dealing with one building and have a mixed-use within that building. Your scenario to me simply sounds like a home improvement loan where the real property that the dwelling sits on is being improved.

I agree, that has been my interpretation of the mixed use property. I am in the midst of a HMDA review and ran into a couple of transactions where improvements made to agricultural buildings were found and were coded as a refinance on the LAR. Just wanted a second opinion – Thanks!

This subject is a mess. I have a similar situation. We are refinancing a loan to a LLC that is secured with a 1st lien on a commercial building (that houses a manufacturing business) appraised at $400,000, along with equipment, inventory, and A/R worth approximately $250,000. To shore up collateral, we also had (and will continue to have) a first mortgage on the LLC's owner's primary residence, which is valued at $350,000. No funds from the new loan or previous loan were used for the purchase or any improvement of the dwelling. The home is located ten miles from the commercial building. Since the loan being refinanced and the new loan are secured in part by a mortgage on a dwelling, this is HMDA reportable? And if so, the occupancy would be primary residence as it is the primary residence of the owners of the dwelling?

Your scenario isn't "mixed-use"....it's a clear cut HMDA refinance, since you have a dwelling-secured loan (doesn't matter that it isn't the only collateral) replacing a dwelling-secured loan to the same borrower. If the home is titled in the individual's name as opposed to the LLC's, then yes, i'd report it as owner-occupied. If it's titled in the LLC's name, i'd record it as non-owner occupied as an LLC doesn't occupy the home. ETA: Perhaps the confusion comes from the fact that your first loan would not have been HMDA reportable. Look at it the same way you would if you had a home equity loan to pay off personal debt. That loan wouldn't be reportable, but if you refinanced it, it would be.

ETA again: for this to have been "mixed-use", the primary dwelling taken as collateral would need to also have a commercial use, not just that the loan itself may be commercial or have commercial property as part of the collateral.

Ok, thanks.

And yet another twist - we have a mixed-use property - abundance of caution - no appraisal. The residence contains a beauty parlor that is rented out. We are refinancing the business loan - reportable? we think the residence and shop are about 50/50.

And regarding HMDA help line - I believe I was given some misinformation but the examiner sided with them so I stopped arguing.....

IMO, it would fall back to what your mixed-use test reveals. If the test you use shows a 50/50 split, i think you'd just have to make your decision and document it well. If it was me and it was truly 50/50, i think i'd report, but that's just me. ETA: if there's no appraisal and you aren't going to get one, that could hinder your ability to test the use. In that case, i think i would definitely report as i don't see much fallout from reporting a "could go either way" one; i see more potential fall out for not reporting it and then trying to defend (without an appraisal) the findings of my "mixed-use" test. Again...just my opinion.