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An existing and new loan are secured by farmland and a primary dwelling located on the farmland. Is this reportable under the Home Mortgage Disclosure Act?

A farmer applies for a cash-out refinance of farmland (18 acres of cotton) that includes a dwelling. Both the existing and new loan are secured by the farmland and a primary dwelling located on the farmland. Is this reportable under the Home Mortgage Disclosure Act (HMDA)?

No, as long as either the property or loan proceeds are used primarily for agricultural purposes it is not HMDA reportable—even if the loan is secured by a dwelling located on that land ... Under §1003.3(c)(9), loans used "primarily for agricultural purposes" are not subject to HMDA. In addition, Comment 1 to that section further explains, "A loan or line of credit is used primarily for agricultural purposes ... if the loan or line of credit is secured by a dwelling that is located on real property that is used primarily for agricultural purposes (e.g., a farm)." Thus, even if the loan proceeds are not used for agricultural purposes, it is not reportable if the loan is secured by property primarily used for agricultural purposes.

An institution may refer to Comment 3(a)-8 in the official interpretations of Regulation Z, 12 CFR part 1026 for guidance on the meaning of agricultural purpose. An institution may use any reasonable standard to determine the primary use of the property and may select the standard to apply on a case-by-case basis. (December 2017)

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