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#1620911 - 10/27/11 03:31 PM Construct to Perm vs Warehouse to Apartment
getinfo Offline
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HMDA Questions:

In using the logic that a construction to perm is reportable as a purchase when you take land as collateral but in the end it will be a residential property. I have a couple questions as to if the two scenarios below are reportable.

Two Scenarios:

1. A loan to purchase a warehouse with additional funds to improve the property and convert it into a 20 unit apartment building? The collateral is the warehouse but in the end will be an apartment building. IF it is considered HMDA reportable, it would be a multi-purpose loan, to purchase and improve, so improve would trump the purchase? OR, would this NOT be considered HMDA as it is NOT a loan to actually purchase, refinance, or improve an existing dwelling?

2. A loan to refinance existing debt, the loan being refinanced originally funded the purchase and conversion of an abandoned church into a 17 unit apt. building, the additional proceeds are being used to convert a vacant school into a 4 unit apartment building. The Collateral is the vacant school, but in the end will be an apartment building.
If scenario one is reportable then would this be reportable as a refinance under HMDA?

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#1621366 - 10/28/11 02:37 PM Re: Construct to Perm vs Warehouse to Apartment getinfo
Mrs. Rizzo Offline
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Curled up by the fire...
How are the loans structured? Are you doing one loan for the purchase and rehab or two seperate? I'm just wondering if they are temporary.
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#1621374 - 10/28/11 02:45 PM Re: Construct to Perm vs Warehouse to Apartment Mrs. Rizzo
Dan Persfull Offline
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Both scenarios IMHO are for the purchase (construction) of dwellings therefore reportable as a home purchases. Unless they meet one of the exemptions such as temporary financing mentioned by Rizz.

Quote:
so improve would trump the purchase?

A home purchase always trumps home improvement or refinancing for reporting purposes.
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#1621988 - 10/31/11 01:39 PM Re: Construct to Perm vs Warehouse to Apartment Dan Persfull
getinfo Offline
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Thanks to both of you..

Here are two more scenarios that I'd like an opinion on if you'd care to that a stab at it.

Purpose of new loan is to paydown a portion of an existing loan secured by a dwelling and new loan is secured by a dwelling. Is this a HMDA reportable loan under the refinance definition?

Purpose of new loan is to term out the outstanding balance on a LOC that was secured by a dwelling and replacing it with a new loan secured by a dwelling, however the LOC is not closed it will remain open for future advances. Is this a HMDA loan reportable loan under the refinance definition?

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#1621999 - 10/31/11 01:58 PM Re: Construct to Perm vs Warehouse to Apartment getinfo
hmdagal Online
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Neither of those scenarios are satisfying an existing obligation, so would not be reportable.

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#1622125 - 10/31/11 04:24 PM Re: Construct to Perm vs Warehouse to Apartment hmdagal
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Between the lines
No, not reportable as refi.

However, what if customer has LOC to do construction of new dwelling, terms out majority of line, but leaves a small balance in anticipation of a few more things to do to house, i.e. landscaping? Customer may plan to simply pay down LOC when he finishes everything or transfer to a HELOC. Wouldn't we still report the termed out portion as a purchase for HMDA even though it doesn't satisfy the initial construction loan? I don't recall ever seeing that requirement for a purchase, but I can see a lender doing this.
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#1622140 - 10/31/11 04:33 PM Re: Construct to Perm vs Warehouse to Apartment SMQ, CRCM
Dan Persfull Offline
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Bloomington, IN
IMHO doing what you describe would not be converting a construction loan to permanent financing because the construction loan still exists.
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The opinions expressed are mine and they are not to be taken as legal advice.

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