Are we thinking this through correctly?

2nd lien home improvement loan, 9 month term, interest only payments. Loan will be paid off by another lender (take out letter in file). APR on TIL is 8.18%.
Because it is temporary financing, we don't need to worry about high-priced mortgage?

If you refer to 1026.35 (a)(3) you can get a pretty clear cut answer.

(a) Higher-priced mortgage loans. (1) For purposes of this section, except as provided in paragraph (b)(3)(v) of this section, a higher-priced mortgage loan is a consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set by 1.5 or more percentage points for loans secured by a first lien on a dwelling, or by 3.5 or more percentage points for loans secured by a subordinate lien on a dwelling.

(2) “Average prime offer rate” means an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics. The Bureau publishes average prime offer rates for a broad range of types of transactions in a table updated at least weekly as well as the methodology the Bureau uses to derive these rates.

(3) Notwithstanding paragraph (a)(1) of this section, the term “higher-priced mortgage loan” does not include a transaction to finance the initial construction of a dwelling, a temporary or “bridge” loan with a term of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months, a reverse-mortgage transaction subject to §1026.33, or a home equity line of credit subject to §1026.40.


So no, your loan would not be considered a HPML due to it being temp financing.