One year note on guys home - HPML but because it is only one year do we avoid HPML?

ok, my issue is this: can loan officers escape HPML on a other-wise qualifying balloon note, simply by making the balloon for a term of one year. The exception at 226.34 talks in terms of bridge loans and other temporary notes with a term of one year or less. So i guess if the loan officer does a one year balloon with no obligation to renew it - he has escaped HPML status.

Is it a temporary loan as described in 226.35(a)(3), or a short term loan? If it's temporary it's exempt. If it's short term it's not.

No he hasn't. Nothing temporary about a 1 year balloon loan, it's simply a short term loan.

These type "games" will get you in some serious trouble because I can assure you MDIA, HPML and all the other revisions are going to be looked at very closely in the next compliance exams.

i can't get through my head what the difference is between temporary and short term. 226.35(a)(3) gives me an example of a bridge loan being temporary - so what is it that would make other notes temporary? It almost sounds like it would have to be a bridge type loan to trigger the one year exception for a balloon note.

Temporary loans are generally loans such as construction loans, bridge/swing loans or loans that are structured to be replaced by long term financing when it comes due.

I for one would not consider any loan that has a P&I payment scheduled as a temporary loan. They are simply short term balloon loans and you would have a very hard time convincing me otherwise.