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My bank is making a loan for a mixed-use property: the first floor is commercial and the second contains 1-4 residential units. Does this property meet the definition of a “dwelling,” or is there an exception for mixed-use property?

My bank is making a loan for a mixed-use property. This property has two floors: the first floor is commercial and the second contains 1-4 residential units. Does this property meet the definition of a “dwelling” for which the ECOA valuations disclosure would be required, or is there an exception for mixed-use property?

It depends. The Consumer Financial Protection Bureau (Bureau) addressed this in a factsheet issued May 2020 by clarifying that mixed-use properties (structures that are not solely residential, such as building containing retail space with an apartment on another floor) ) may fall under the appraisal rule requirements if the residential portion of a mixed-use property with one-to-four units secures the loan. In that case, the definition of a dwelling is satisfied. If, however, the commercial structure alone (e.g. just the retail space) is pledged as collateral, it would not satisfy the definition of a dwelling and would therefore not be a covered transaction under the Rule. (October 2020)

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