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#1460894 - 10/28/10 06:06 PM Reportable? Short term loan w/AOC mtg
Many Hats Offline
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Orlando, FL
We did a loan in which an AOC mortgage was taken on the borrower's existing primary residence and on the new home being purchsed. It is a 12 month closed-end loan.

Would this be HMDA reportable?

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#1460912 - 10/28/10 06:18 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Yep. As mentioned many many times AOC does not mean diddlely squat when it comes to HMDA, RESPA, TIL including MDIA & HPML, Flood, Reg B, etc.

The only thing it currently does is relieve some appraisal requirements.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1465225 - 11/08/10 02:52 PM Re: Reportable? Short term loan w/AOC mtg Dan Persfull
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Orlando, FL
Another question on this same scenario.....

I have learned that this is being referred to as a brige loan; however, an AOC mtg was taken on BOTH the existing residence and the new home being purhcased.

I think it is HMDA reportable, but I am getting arguments from the lender.

If it was secured ONLY by the primary residence, I would be okay with it being called temporary financing/bridge loan.

But since that is not the case, it is reportable, correct?

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#1465236 - 11/08/10 03:01 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
It could be a bridge loan but it would be dependent on the repayment terms.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1465267 - 11/08/10 03:30 PM Re: Reportable? Short term loan w/AOC mtg Dan Persfull
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Orlando, FL
It is an interest-only monthly payment plan at a variable rate, closed-end loan w/principal due at maturity (in a year).

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#1465287 - 11/08/10 03:49 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Many Hats Offline
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Orlando, FL
Also......the intention is that the home being sold will pay off the loan (so permanent financing is not in the picture).

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#1465334 - 11/08/10 04:39 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
What financing gap is the loan bridging?

If the 12 month loan is to be repaid with the sale of the current home then that loan would be treated as the short term permanent financing in our shop and reported as a home purchase.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1465343 - 11/08/10 04:47 PM Re: Reportable? Short term loan w/AOC mtg Dan Persfull
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Orlando, FL
I see what you mean....they are calling this a bridge loan, but it's a bridge to nowhere since the loan is ultimately going to beid off with proceeds from the sale of the existing home. If for some reason it doesn't sell when anticipated, then we'll likely just renew the existing loan for another period of time.

Good stuff...thanks Dan!

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#1466013 - 11/09/10 07:10 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Sage Offline
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This is not a term we use -what is an AOC mortgage? Is it an open end?

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#1466027 - 11/09/10 07:21 PM Re: Reportable? Short term loan w/AOC mtg Sage
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
AOC = Abundance of Caution
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1466674 - 11/10/10 06:58 PM Re: Reportable? Short term loan w/AOC mtg Dan Persfull
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Orlando, FL
Another concern has surfaced regarding this transaction...would it be subject to RESPA? Or, since it was > 2 yrs.....we're okay if we did not disclose?

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#1467011 - 11/11/10 06:00 PM Re: Reportable? Short term loan w/AOC mtg Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Your original post indicates it's a 12 month loan, not one greater than 2 years.

The two years you are most likely referring to only applies to construction loans. A construction loan that has a term greater than 2 years loses it's temporary exemption and is subject to the rules.

If the loan is a consumer purpose loan and you have not found a legitimate exemption under 3500.5 then it would be subject to RESPA.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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