got a situation that i was curious how other report.
Borrower had storm damage on her current primary residence. Damage was extensive enough to warrant tear/down and rebuild.
So borrowers tore down the home and did a construction loan to build the new home (on the dame piece of land, right next to the old foundation... actually were two homes on single parcel temporarily). We came back and paid off the construction loan with permanent financing. SHould this permanent financing be reported as Purchase, HI or refinance. I could litterally argue all three.
Report as Purcahse: this is the permanent financing to replace a construction only loan; Purcahse trumps everything else.
But a borrower cant purchase a home that she already owned.
Home Improvement: Obviously she improved the real property as she built a new home.
But its hard to justify callling it a HI loan when the HUD reflected the borrowers bringing in 10K to close. so no proceeds to improve, while realistically the construction loan did the improving.
Refinance: since the borrower already owned the damaged home, and paid off a construction loan with this permanent financing, report as refinance.
So I wanted to know, if anyone eles had had guidance for these types of situations.