We recently had an FDIC Data Specialist HMDA pre-exam review. One of the specialists indicated that applications primarily for ag/farm loans are excluded from HMDA coverage. I know in the Guide to Getting it Right the rule for purchase is very clear. However, I can’t find anything as definitive for refinance or home improvement. Do we look to the purpose first and if it is primarily ag/farm (or even commercial non residential) then stop? The examiner referred me to an FDIC Q&A that discussed two properties securing an application for a refinance where the primary property was commercial non real estate. He told me I could just insert ag/farm in place of commercial buidling and follow the same logic. Obviously, we will follow what the examiner gave us, but I would like to see this in a guide, regulation, or commentary or hear if others are getting the same error on their HMDA exams.
This is a tricky one. It really depends on the true purpose of the loan. (In my opinion)
I’ve seen/dealt with loans before where a “farmer/rancher” purchased land and a dwelling was on that land. His intended purpose was to purchase this for the ag usage, not the dwelling and the acreage was over 25 so we exempted it.
I’ve had loans where the intended purpose was to purchase a home that came with (an example) 30 acres. Yes, those 30 acres were for ag/farm usage but the purpose for the customer was to purchase a home. Therefore, not exempt.
I think on the basis of refinance and improvements it’s really going to depend on the purpose of the loan. I wouldn’t look at these loans, realize they have farm land and stop there. It’s going to depend a lot on what your financial institution wants to do too.