[TheBank]

We have a commercial loan to a business to purchase a 12 acre tract of land for future relocation of headquarters of the business. That tract of land has an old home built in 1964 not included in the appraised value. The plan is to tear down the home then build the office, warehouse, and equipment yard. However, as of the time of loan origination, the home had not been torn down. Is this loan HMDA reportable?

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[jholzknecht]

The simple answer to your question is “Yes.”

HMDA applies to covered loans. Covered loans includes closed-end mortgage loans and open-end lines of credit. Either a closed-end or open-end loan must be secured by a dwelling. So far it appears your loan is covered.

There is a list of 13 excluded transactions in Section 1003.3(c). The tenth item on the list excludes a loan that is made primarily for a business or commercial loan, unless the loan meets the definition of a home improvement loan, a home purchase loan or a refinance. Your loan appears to fit the definition of a home purchase loan, which includes open-end or closed end loans secured by a dwelling that is for the purpose, in whole or part, of purchasing a dwelling. A dwelling is a residential structure, whether or not attached to real property. There are several exclusions from the definition of dwelling including a structure originally designed as a dwelling but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices. This last item gets close to excluding your transaction, but the structure is not used for the stated purpose.

[Author]

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