We are doing a lot development loan where 5 parcels, each of which has an existing house, are being combined into a 48-lot development. Four of the five houses are being torn down, but the fifth is being renovated and sold. This is being written as a one-year construction loan. Because one of the homes is being renovated and resold, do you think this eliminates the temporary financing exemption?

Yes. It meets the "splash and dash" scenario.

Temporary Financing. When is a loan "temporary financing" such that it is exempt from reporting?

Answer: The regulation lists as examples of temporary financing construction loans and bridge loans. See 203.4(d)(3). Construction and bridge loans are illustrative, not exclusive, examples of temporary financing. The examples indicate that financing is temporary if it is designed to be replaced by permanent financing of a much longer term. A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan. See 203.2(h).