We do a lot of construction lending to contractors, which is typically non-HMDA reportable, as it falls under temporary financing exemption. Periodically, we do loans for model homes within a subdivision, and will often write them for 2-3 years until the subdivision is complete, at which point the developer will sell the model as well. We do not include these loans on the HMDA LAR either, because we consider it temporary financing. However, we have just given a construction loan for a model home within a 100+ lot subdivision that was written for a 20 year term. (I have no idea why) Basically it's a 12 month interest only loan, converting to a 20 year amortized loan, even though it is expected that the loan will pay off within 5 years or so.
My gut instinct is that this is a HMDA reportable loan, because it's a dwelling (even though no one will be living there) and it was given a 20 year term. Am I correct in my thinking? Or would the commercial purpose exemption apply here, since they won't be making any income from it?
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