What is considered temporary financing? I have been told 3 different things so I am trying to get the best definition I can.

(3) Temporary financing. Temporary financing, such as a construction loan. The exemption for temporary financing does not apply to a loan made to finance construction of 1- to 4-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender or is used to finance transfer of title to the first user. If a lender issues a commitment for permanent financing, with or without conditions, the loan is covered by this part. Any construction loan for new or rehabilitated 1- to 4-family residential property, other than a loan to a bona fide builder (a person who regularly constructs 1- to 4- family residential structures for sale or lease), is subject to this part if its term is for two years or more. A ``bridge loan'' or ``swing loan'' in which a lender takes a security interest in otherwise covered 1- to 4-family residential property is not covered by RESPA and this part.
(From RESPA 3500.5)

Thank you!

Temporary financing is a loan (other than a construction or bridge loan) that is designed to be paid with much longer term financing.

A 1 year balloon note with P&I payments is short term financing.

A 1 year loan with with monthly interest payments and the principal balance will be paid with a long term loan at maturity is a temporary loan.

All construction loans with a maturity of less than 2 years are considered temporary loans.

Bridge loans are exempt as temporary loans.

So, A 1 year note with monthly interest payments and the principal balance will be paid off with cash from the sale of a second home would be considered short term financing, correct?

It's not being replaced with a longer term it is only for 12 months.

Is this outlined in RESPA somewhere?

Search the threads using +temporary +loan. You will find hundreds of discussions. You can also refer to.

http://www.bankerscompliance.com/assets/files/articles/HMDA%20and%20Temporary%20Financing.pdf

Thanks Dan. That link is for HMDA but I'm asking about RESPA. Do we apply the same logic to when determining applicability under RESPA as we do for HMDA?

Yes.