HMDA does apply to commercial loans, but only when the loan is secured by a lien on a dwelling. Under Regulation C, which implements the Home Mortgage Disclosure Act, coverage turns on the collateral, not the borrower’s purpose. A $20 million loan to a corporation buying an apartment complex is reportable. The same loan to buy an office tower is not. Once your institution falls within HMDA’s reach, every dwelling-secured loan it originates, including business-purpose ones, goes on the Loan Application Register.
The Dwelling Test Is What Matters
A covered loan under Regulation C is a closed-end mortgage loan or open-end line of credit that is secured by a lien on a dwelling and not otherwise excluded.1eCFR. 12 CFR 1003.2 – Definitions The borrower’s motivation is irrelevant at this threshold. If the collateral is a dwelling, you’re inside HMDA.
Regulation C defines a dwelling as a residential structure, whether or not attached to real property. That includes detached homes, condominiums, cooperative units, manufactured homes, and multifamily buildings. A “multifamily dwelling” specifically means one containing five or more individual units.1eCFR. 12 CFR 1003.2 – Definitions
Several structures are explicitly excluded from the dwelling definition. Transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks are not dwellings. Neither are recreational vehicles themselves: boats, campers, travel trailers, and park model RVs, regardless of whether someone lives in them. Buildings originally designed as dwellings but now used exclusively for commercial purposes, like a house converted into a daycare or professional office, are also excluded.
The line between long-term housing and medical care matters. Assisted-living facilities and retirement communities that provide long-term housing with related services qualify as dwellings. Skilled nursing facilities and rehabilitation centers, which provide primarily medical care, do not.2Federal Register. Home Mortgage Disclosure (Regulation C) When a facility combines long-term housing with a medical care component, it’s still reportable.
Mixed-Use Property
Buildings that contain both residential and commercial space are covered only if the primary use is residential.3Consumer Financial Protection Bureau. HMDA Transactional Coverage Effective January 1, 2022 Regulation C does not prescribe a single formula. An institution can use any reasonable standard, including square footage, income generated, or number of units allocated to each use, and can choose that standard on a case-by-case basis. A building where 60% of the floor space is apartments and 40% is retail is likely a dwelling. Reverse the proportions and it isn’t. Whatever standard you choose, examiners will want to see it applied consistently and documented.
Commercial Loans You Must Report
Because the dwelling test ignores purpose, a lot of plainly commercial transactions are HMDA-reportable.
Multifamily acquisition and refinancing lead the list. A commercial real estate firm borrowing to acquire a 100-unit apartment complex is making a reportable transaction. Whether the borrower is a corporation, LLC, partnership, or individual makes no difference.
Investor loans on rental properties come next. Financing the purchase or refinance of a single-family rental, a duplex, or a fourplex is reportable. The business purpose of generating rental income does not override the dwelling collateral.4eCFR. 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C)
Home improvement or rehabilitation loans on investment properties are also covered, because the collateral is a dwelling throughout the project.
All of these loans require the full HMDA data set, including a flag identifying the loan as made primarily for a business or commercial purpose.5eCFR. 12 CFR 1003.4 – Compilation of Reportable Data
Commercial Loans That Are Exempt
Several categories of business-purpose loans fall outside HMDA even when real estate is involved.
Purely commercial collateral is the cleanest exclusion. A loan secured by an office building, warehouse, or retail center with no residential component fails the dwelling test entirely.
Unimproved land is generally excluded, with a catch. If the institution knows at the time of application or credit decision that the borrower will use the proceeds within two years to construct or place a dwelling on the land, the exclusion does not apply and the loan becomes reportable.6eCFR. Supplement I to Part 1003, Title 12 – Official Interpretations A raw land acquisition where the borrower has already told you about the townhome project scheduled for next spring is not exempt.
Temporary financing is excluded. A standalone construction loan designed to be replaced by permanent financing from any lender qualifies.6eCFR. Supplement I to Part 1003, Title 12 – Official Interpretations A combined construction-to-permanent loan structured as a single legal obligation, however, is reportable; the construction phase does not qualify as temporary financing in that structure.7Consumer Financial Protection Bureau. Home Mortgage Disclosure Act FAQs The distinction between two separate loans and one combined instrument decides the outcome.
Agricultural-purpose loans are excluded even if the collateral is a dwelling. A loan secured by a farmhouse on active agricultural land qualifies. The institution can use any reasonable standard to determine whether the property’s primary use is agricultural.4eCFR. 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C)
Non-dwelling-secured business credit is out. A revolving line secured by accounts receivable, equipment, or inventory is not reportable, even if the borrowing entity owns residential property on the side. The collateral itself has to be a dwelling.
Modifications and Workouts
Commercial loan modifications are a recurring source of HMDA confusion. The general rule: a modification that changes the terms of an existing loan without satisfying and replacing the original obligation is not a covered transaction. HMDA treats a transaction as a reportable refinancing only when the existing debt is fully satisfied and a new obligation takes its place.4eCFR. 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C)
A rate reduction or maturity extension documented by an amendment to an existing multifamily loan is generally not reportable. Pay off the old note and have the borrower sign a completely new one, and you have a refinancing that must be reported if the new loan is secured by a dwelling.
Two narrow exceptions apply. An assumption, where a new borrower replaces the existing obligor on a dwelling-secured loan, is treated as a covered transaction. So are certain consolidation, extension, and modification agreements under New York tax law that are classified as supplemental mortgages.
Is Your Institution Even Covered?
Transactional coverage matters only after institutional coverage. For 2026 reporting, depository institutions are covered if they held more than $59 million in assets as of December 31, 2025,8Federal Register. Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption Threshold had a home or branch office in a Metropolitan Statistical Area on the preceding December 31, originated at least one home purchase loan or refinancing secured by a first lien on a one-to-four unit dwelling in the preceding calendar year, and originated at least 25 closed-end mortgage loans in each of the two preceding calendar years or at least 200 open-end lines of credit in each of the two preceding calendar years.4eCFR. 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C)
Nondepository mortgage lenders (any for-profit mortgage-lending entity that is not a bank, savings association, or credit union) face a simpler test: MSA presence plus the same 25 closed-end or 200 open-end origination thresholds.4eCFR. 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C) There is no asset-size test for nondepositories. The asset threshold is adjusted for inflation each year; the 25/200 loan-volume thresholds are fixed in the regulation.
How to Report a Commercial Dwelling Loan
Once a commercial loan is determined to be reportable, it goes on the Loan Application Register with the same data fields used for consumer mortgages. LAR data is due to the institution’s appropriate federal agency by March 1 of the year following the calendar year in which the data was collected.
Key data points for a business-purpose dwelling loan include the loan purpose (home purchase, home improvement, refinancing, or other purpose, based on the actual use of proceeds), property type (one-to-four unit or multifamily), property location (MSA, state, county, and census tract), the business or commercial purpose flag, action taken and date, and rate spread. For commercial loans not subject to Regulation Z, rate spread is reported as “Not Applicable.”5eCFR. 12 CFR 1003.4 – Compilation of Reportable Data
Demographic data (ethnicity, race, and sex) must be collected when the applicant is a natural person, even on a business-purpose loan. When the borrower is a corporation, LLC, or other non-natural-person entity, these fields are reported as “Not Applicable.”9Consumer Financial Protection Bureau. HMDA Rule – Reporting Not Applicable The institution’s Legal Entity Identifier must be included on the LAR submission as part of the Universal Loan Identifier for each record.10Consumer Financial Protection Bureau. Reportable HMDA Data – A Regulatory and Reporting Overview Reference Chart
Errors and Enforcement Exposure
HMDA errors on commercial loans cluster around the same handful of mistakes: failing to report dwelling-secured business loans at all, miscoding property type, and omitting mixed-use loans. Examiners sample LAR entries and compare them against loan files.
The CFPB’s resubmission thresholds are quantitative. For institutions with fewer than 100,000 LAR entries, a sample error rate of 10% or more triggers full resubmission. For institutions with 100,000 or more entries, the threshold drops to 4%.11Consumer Financial Protection Bureau. HMDA Resubmission Examination Procedures Guidelines Resubmission can also be required below those thresholds if errors make the data unreliable for analysis.
HMDA violations can bring civil money penalties from the institution’s prudential regulator or the CFPB. Enforcement actions are public, and HMDA data itself is public, so errors invite scrutiny from fair-lending advocates, community groups, and reporters. Commercial lenders that treat HMDA as a consumer-side problem are often the ones who learn this the hard way.