We are financing the purchase of a lot with an existing dwelling. The dwelling will be torn down shortly after consummation. The term will be between 12-24 months, loan to be refinanced into a construction mini-perm by us. My initial thought....subject to RESPA due to the existing dwelling and our commitment for the permanent financing. However, can this loan fit into the temporary financing exemption? I realize the construction loan exemption does not apply when the lender may convert the loan to permanent financing. Would the same apply to this type of loan.

Would appreciate any thoughts on this issue.

According to other posts, it may be considered temporary since the repayment will be based on long term financing (and it's not a construction loan so there isn't a 'first user').

Seems different regulators interpret this differently. The FRB did apply the same criteria as for construction loans, but the FDIC doesn't seem to.

Perhaps you should ask how your region interprets it? I would also consider the structure of this loan...is it interest only? If not, and it's P&I, I would hesitate on calling it temporary.

Thanks for your reply.

The loan is interest only. My preference is to disclose and I will recommend we do so. However, when an officer receives the application they view as a lot loan and do not provide the information to the appropriate people in a timely manner and we miss our 3 day deadline. Training, training, training!

We are scheduled for an FDIC exam very soon. I'm interested to hear their take on this issue.

I will also say, I just noticed you are from Texas, which is a absolute 'beast' of it's own when it comes to state law!

As you have described it, I would consider it temporary financing from a regulatory standpoint. Now, if they demolish and then come in for a CL and you will provide the permanent...then you kick everything in gear!

We will be providing the construction and permanent financing at a later time and will provide full disclosures for that transaction.

Yes, Texas is a beast!