Scenerio: Purchase house with a 9 month construction loan to remodel - loan will be paid out by closing a separate 2nd market loan when 9 month loan matures (or completion of remodeling). One hand says to collect since it is a purchase. The other says not to since it's temporary financing....
Please share your thoughts... Couldn't find this situation in the reg's. Thanks!

You have a 2 phase purchase/HI permanent loan. You should have collected GMI. You took the application for the permanent loan at the same time for the "temporary loan" (or are using the same application), otherwise how do you know you will be closing a permanent loan to be sold on the 2ndary market?

I should have been more clear... the construction loan is the loan I am questioning.. the same application will not be used on the secondary market loan.

You don't have a construction loan. You have a temporary purchase/home improvement loan.

For Reg. C purposes you would not collect GMI on the Temporary loan but you would for the permanent loan at the time of application for the permanent laon, however for Reg. B purposes you would collect GMI for the temporary loan. The only temporary loan exempt in Reg. B is a construction loan (the iniitial construction) for the primary residence.

I've been looking this morning for the Reg B exception for temporary loans (Construction). Can anyone tell me where the site is located? Thanks.

The Official Staff Commentary to 202.13(a).