I have a loan that was to purchase commercial real estate - I review and see it is secured by a 1-4 family residence. So I assume it is to be used as a rental property, but we have it coded as Commercial RE - Owner occupied. I reach out to the lender - the borrower is said to be operating his lawn and landscaping business from it and it was presented as his business headquarters. Ummmm... the lender also states that they cannot verify that the borrower is/isnt sleeping there. Nothing in the loan file mentions anything about purchasing a SFR, other than the appraisal - everything else states commercial property.

I would have questioned this from the beginning, however I have seen other businesses having cheap houses to operate out of or for storage.

Do I report this as HMDA? Purchase investment property??

"the lender also states that they cannot verify that the borrower is/isnt sleeping there"

Sounds like you have a LO that might be trying to pull a fast one to me if he says he can't answer this sort of question. HMDA reporting, if this was actually a consumer loan, might be the least of your worries. What is the individuals' address, since that would be a component of your CIP. Do their financials show that they own additional real estate? Does the business generate enough cash flow alone to justify having a separate headquarters. Is there sufficient storage on the property for the equipment needed to operate such a business? There are many such questions that probably need to be answered.

Besides Randy's questions, is the area zoned for business, especially if equipment is going to be there.

Does the property currently operate as a commercial building ( hair salon, day care, Law Office, bed and breakfast, etc...)?

If it does... then it's NOT a house.

If it is currently being used as a house and he wants to turn it into a commercial building...then it's a SFR and HMDA reportable.

If the purpose of a commercial loan is to purchase an established Bed & Breakfast, would that be reported in CRA as SB or OB?

This is from an old post with the same question:

This sounds like a mixed use property, where a portion is used for residential and the rest is commercial. You can use any reasonable standard to decide if this meets the definition of a dwelling, but the two most common are the square footage test and the income test. If more than half of the square footage is used as the B&B, then I wouldn't consider it a dwelling and would exclude from HMDA.