In appendix A of the HMDA Getting it Right Guide, it discusses Owner Occupancy which the loan or loan application is to be owner occupied as a principal residence and then goes on to describe the applicable codes. We have a situation where a note is secured by a 1-4 residence. The note is an applicable HMDA refinance. The one individual on the note lives at the residence and it is his primary residence. However, he does not own the residence; it is his parent’s house and they live there also. However, the parents’ names are not on the note, but it has been pledged as collateral. I am up in the air as to whether this is owner occupied. On one hand, the individual does not own the house (non-owner occupied); however, it is their primary residence (leaning me toward owner occupied). I guess the real question is, in this case, does ownership trump primary residence or the other way around. Could you please provide some guidance? Thanks so much for your help.
I am not aware of any Federal Reserve interpretations on this issue, and, of course, the Consumer Financial Protection Bureau has not issued any interpretations since they inherited the regulation last July. The question is whether the owner occupies the dwelling as his/her principal dwelling. Since the owners, the parents, occupy the dwelling as their principal dwelling the answer appears to be yes, the property is owner-occupied as a principal dwelling.