Lenders reporting HMDA data must complete the “Property Type” field on the Loan Application Register (LAR) to identify the type of property. Options include one-to-four family dwelling (other than manufactured housing), manufactured housing, or multifamily dwelling. The “multifamily dwelling” property type is often misreported due to a lack of understanding of the definition of multifamily dwelling.
For HMDA reporting, a multifamily dwelling is a residential structure that houses five or more families. Even though condominium buildings can house five or more families, if each unit is individually owned, then the dwellings should be reported as one-to-four family dwellings, not multifamily property. On the other hand, apartment buildings generally do not have individual ownership of each unit, so the building should be reported as a multifamily dwelling. It is a common misconception that the purchase of an entire mobile home park (e.g., the purchase of five or more individual mobile homes) should be reported as a multifamily property type. Because each mobile home falls within the definition of an individual unit, the property type should be reported as manufactured housing.
According to Appendix D of “A Guide to HMDA Reporting,” when reporting the purchase of a mixed-use property (e.g., an apartment building that contains a convenience store), an institution may:
• Use any reasonable standard to determine the primary use of the property, such as by square footage or by income generated; and
• Select the applicable standard on a case-by-case basis.
In the example of an apartment building that contains a convenience store, an institution may determine that most of the square footage is being used for residential purposes and, because the structure is an apartment building that can house five or more families, the property type could be reported as a multifamily dwelling.