I have a commercial loan for over $3MM with many different moving parts that I need help in determined how to report.

The loan is a 2nd mortgage. The bulk of the loan proceeds will be used to purchase another commercial building which will be torn down and combined with another commercial building to create 12 rental apartments of which 2 units are set aside as affordable rental units by the town.

Because the loan amount over a$1MM, it is not a small business loan.

1. The loan is currently secured by the commercial real estate, but the end use will be residential real estate ( Does that make it HMDA reportable??).

2. Can I prorate the loan amount by the percentage of affordable rental units( multi family housing) and report this amount under Community Development?

Bottom line question: Is this loan both HMDA & Community Development or is it just one or the other.

I will venture that it is not currently HMDA report-able since it appears the proceeds will be used for construction of the apartment units.

If the majority of the development (i.e. more than 50% of the units) is NOT restricted to low- moderate-income, this is addressed in 2 of the FAQ to the regulation:

FAQ - _.12(h)-8 allows a pro-rata consideration be given in a mixed-income development that has set-aside a specific number or percentage of housing for low- and moderate-income.

FAQ _42(b)(2)-3 states that you would report the amount of the loan that corresponds to the proportionate amount of low-mod housing. The example given is a $10 Million loan for a mixed-income housing development where 10% of the units are set-aside for low-mod, the bank would report $1 Million as a Community Development loan.

Potentially you can report 100% as community development if you meet the alternative definition of "primary purpose" by fulfilling the 3 conditions required to do so.

Thank you. I did not think this was HMDA reportable. I was thinking that I would report only a pro-rata share of the loan to Community Development under affordable housing. The loan does not meet the "primary purpose" to report at 100%.

It sounds like you have potential for qualifying for the second definition of primary purpose, stated (in writing) qualified purpose, deal structure and then reasonable certainty of achieving purpose.

Yes, I agree.

Thank you.