IBA Compliance Connection

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We made a loan to a business entity to purchase a 35-unit apartment complex. The loan is secured by all 35 units. The loan is a covered purchase loan under the 2017 HMDA Final rule. Do we report this as secured by 1 unit or 35 units? Also, should we report the interest rate, combined loan-to-value (CLTV) ratio, and property value for this loan?

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For loans secured by multi-unit dwellings, the 2017 HMDA Final Rule and its Official Interpretations provide that lenders should report the total number of individual dwelling units securing the loan, which in this case would be 35.  

The 2017 HMDA Final Rule also requires lenders to report the value of the property and the interest rate of the loan. There is no exception to these requirements for the purchase of a multi-unit property. In addition, you also must report the total amount of debt secured by the property to the value of the property (referred to as the combined loan-to-value ratio), but only if you relied on that in making your credit decision.

For resources related to our guidance, please see:

  • Regulation C, 12 CFR 1003.4(a)(31) (“The data collected shall include the following items: . . . (31) The number of individual dwelling units related to the property securing the covered loan or, in the case of an application, proposed to secure the covered loan.”)
  • Regulation C, Official Interpretations, 12 CFR 1003, Paragraph 4(a)(31), Comment 3 (“For a covered loan secured by a condominium or cooperative property, the financial institution reports the total number of individual dwelling units securing the covered loan or proposed to secure the covered loan in the case of an application. For example: . . . (ii) Assume that a covered loan is secured by 30 individual dwelling units in a condominium property that contains 100 individual dwelling units and that the loan is not exempt from Regulation C under § 1003.3(c)(3). The financial institution reports 30 individual dwelling units.”)
  • Regulation C, 12 CFR 1003.4(a)(21) (“The data collected shall include the following items: . . . (21) The interest rate applicable to the approved application, or to the covered loan at closing or account opening.”)
  • Regulation C, 12 CFR 1003.4(a)(28) (“The data collected shall include the following items: . . . (28) The value of the property securing the covered loan or, in the case of an application, proposed to secure the covered loan relied on in making the credit decision.”)
  • Regulation C, 12 CFR 1003.4(a)(24) (“The data collected shall include the following items: . . . (24) Except for purchased covered loans, the ratio of the total amount of debt secured by the property to the value of the property relied on in making the credit decision.”)