FAQ – Reporting Business Purpose Loans – MCR and HMDA
January 5, 2023 BY MQMR Blogger
Question: Are business purpose loans reported on the Mortgage Call Reports (MCR) and/or the HMDA LAR?
Answer: Business purpose loans are clearly excluded from the MCRs based upon the MCR definition of an application:
An application is an oral or written request for an extension of credit encumbering a 1- 4 family residential property. Exclude any commercial/business/investment purpose encumbrances from reporting. Include inquiries or Pre-Qualification requests that result in denial of credit. The application date used is either (1.)The date on the initial 1003 with the borrower’s signature; (2) The date of an oral request for extension of credit, with deference to the initial 1003; (3) Inquiries and Pre-Qualification requests, if declined, should use the denial date.
For HMDA purposes, an exclusion exists for loans that are primarily for business or commercial purposes unless the loan is also a home purchase loan, home improvement loan, or refinancing – in which case, it should be reported on the HMDA LAR.
1003.3(c)(10): The requirements of this part do not apply to: (10) A closed-end mortgage loan or open-end line of credit that is or will be made primarily for a business or commercial purpose, unless the closed-end mortgage loan or open-end line of credit is a home improvement loan under § 1003.2(i),a home purchase loan under § 1003.2(j),or a refinancing under § 1003.2(p);
Home Purchase Loan – a closed-end mortgage loan or an open-end line of credit that is for the purpose, in whole or part, of purchasing a dwelling. 12 CFR 1003.2(j)
Home Improvement Loan – a closed-end mortgage loan or an open-end line of credit that is for the purpose, in whole or part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which the dwelling is located. 12 CFR 1003.2(i)
Refinancing – a closed-end mortgage loan or an open-end line of credit in which a new dwelling-secured debt obligation satisfies and replaces an existing dwelling secured debt obligation by the same borrower. 12 CFR 1003.2(p)