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#1751457 - 10/23/12 04:19 PM Reg Z temporary vs short term
golden oldie Offline
Joined: Jul 2011
Posts: 72
Reg Z doesn't define "temporary" like other regulations. Short term 12 month, P&I loan, can be a Section 35...right or wrong? Section 35 reads temporary 12 months or less...Some one end the argument for me, please

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Lending Compliance
#1751471 - 10/23/12 04:35 PM Re: Reg Z temporary vs short term golden oldie
Glutes Offline
Platinum Poster
Joined: Dec 2005
Posts: 587
"Short-term" loan is not the same as a "temporary loan".

Someone else can correct me if I'm misunderstanding this, but I believe the "12 months or less" reference in section 35(a)3 is to distinguish between those temporary or bridge loans that are exempt and those that aren't. Temporary or bridge loans less than a 12 month term are exempt. Temporary or bridge loans greater than 12 months are not.

In your example, I don't believe your "short term" loans is a "temporary loan" as it's a straight payout with P&I likely being paid out of the borrower's regular income. If it's not "temporary" then the exemption rule above regarding "less than 12 months" isn't really applicable.

If the transaction meets all other requirements to be an HPML loan, then it's an HPML transaction.

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#1751496 - 10/23/12 05:03 PM Re: Reg Z temporary vs short term golden oldie
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 46,959
Bloomington, IN
Agree with Glutes' analysis.
The opinions expressed are mine and they are not to be taken as legal advice.

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