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The term “credit card” means any card, plate, or other single credit device that may be used from time to time to obtain credit. A card that accesses a HELOC is a credit card. The rules for a HELOC and for an open-end (not home-secured) plans differ. That difference may be the source of your confusion.
I am not familiar with a federal law or regulation that addresses this issue. Very often record retention requirements are mandated by state law. You may want to contact your state banking association or your state Department of Financial Institutions. Check the state law under which the department was chartered.
Comment 2(f) – 5. explains the ends and outs on this issue. “For purposes of § 1003.2(f), a property used for both long-term housing and to provide related services, such as assisted living for senior citizens or supportive housing for persons with disabilities, is a dwelling and does not have a non-residential purpose merely because the property is used for both housing and to provide services. However, transitory residences that are used to provide such services are not dwellings. See comment 2(f)-3. Properties that are used to provide medical care, such as skilled nursing, rehabilitation, or long-term medical care, also are not dwellings. If a property that is used for both long-term housing and to provide related services also is used to provide medical care, the property is a dwelling if its primary use is residential. An institution may use any reasonable standard to determine the property’s primary use, such as by square footage, income generated, or number of beds or units allocated for each use. An institution may select the standard to apply on a case-by-case basis.
The key is to have a residential component.
Comment 2(f) – 5. explains the ends and outs on this issue. “For purposes of § 1003.2(f), a property used for both long-term housing and to provide related services, such as assisted living for senior citizens or supportive housing for persons with disabilities, is a dwelling and does not have a non-residential purpose merely because the property is used for both housing and to provide services. However, transitory residences that are used to provide such services are not dwellings. See comment 2(f)-3. Properties that are used to provide medical care, such as skilled nursing, rehabilitation, or long-term medical care, also are not dwellings. If a property that is used for both long-term housing and to provide related services also is used to provide medical care, the property is a dwelling if its primary use is residential. An institution may use any reasonable standard to determine the property’s primary use, such as by square footage, income generated, or number of beds or units allocated for each use. An institution may select the standard to apply on a case-by-case basis.
The key is to have a residential component.
I do not have experience opening a loan production office (LPO). Generally notice to your federal regulator, and if you are a state-chartered financial institution your state regulator, is required.
You may encounter some issues on the CRA front. Often times a LPO is located outside of your CRA assessment area. Every loan made outside of your assessment area has a bit of a negative impact on your CRA performance. Watch the numbers. If the LPO is generating a good volume of loans you may want to redraw your assessment area to include at least a portion of the area in which the LPO is located.
I am not aware of any provisions that would prohibit making the loan you describe. I agree with your analysis that the transaction is not covered by the ability to repay rules.
You mentioned that the loan is secured by the existing dwelling, which is apparently the consumer’s principal dwelling. Rescission applies.
It appears you have done a good job analyzing the loan.
You are no longer required to make the actual data available, but until such time as the CFPB has it all available on their website it makes sense to continue to make it available from you. If you are making the data available I would continue to mention the availability in your lobby notice.
Trish,
I remember you were exempt for 2017. Is your bank covered or exempt for 2018?
In any event you should have your 2015 and 2016 LAR data and HMDA Disclosures available.
Use the new HMDA lobby notice. The old data doesn’t seem to be fully available on the CFPB website yet, so make the actual disclosure available upon request.
Jack
You have done a fine job of analyzing this complex scenario.The transaction does appear to be a refinance of a multi-family dwelling.But the 20 units leased to the non-profit may be transitory units. “Transitory” indicates the borrower lives here for a while before returning the their regular residence. Is that the case with these units? Once the residents get “back on their feet” do they return to their homes?
With more information you should be able to determine if the units are transitory. If they are, with 20 of 22 units used in a transitory manner, it should be easy to argue primary purpose.
The commentary explains that the construction loan proceeds appear on line K04, which is consistent with your practice. The commentary does not provide examples of items that are disclosed in the Adjustment section (Line K05 – 07).
The instructions for completing the LAR that for a loan that is originated the date of action taken should be the date settled or closed, or the date funds are disbursed. I agree with the comment regarding consistency, but being consistently wrong is not a good thing. If the date of the promissory note is a date other than the date settled or closed, or the date funds are disbursed, then a correction is appropriate.
An appraisal is required for a higher-priced mortgage loan secured by a first lien on a consumer’s principal dwelling according to 1026.35(b). However 1026.35(c)(2) contains an exemption for a HPML secured by a mobile home. There is a partial exemption for a HPML secured by a manufactured home. Is your collateral a mobile home or a manufactured home?
In your case the appraisal requirement probably does not apply due to the mobile home exemption, the fact that the mobile home is apparently not a principal dwelling, and the loan may or may not be an HPML.
The November 2017 changes to the CRA regulations did not change either of the CRA lobby notices. The agencies still need to clean up the existing CRA Questions and Answers. Further changes to the CRA regulations might also occur. For more information see https://mycomplianceresource.com/final-amendments-to-cra-regulations/
