We have a customer that is buying a new home and has already sold his other home. He needs a loan for 6 months to put down on his new home. We are taking the new home as collateral. I believe this is a short term loan and we have to comply with mortgage disclosures. Our lending department believes we can get around the disclosures by saying it is temporary financing since we are not converting to permanent financing.
Help!

I'm confused. If he has already sold his home, why does he need a loan for a downpayment?

Temporary financing is when the loan will be converted to permanent financing.

A short term loan is when the loan will be paid by other funds.

He needs a loan for 6 months to put down on his new home.

This implies the loan is for a down payment on the new home. How will this loan to be repaid?

Temporary financing = construction (not what you describe), bridge (not what you describe) or 2 phase financing (I don't think this is what you have described but the answer to Dan's question may clarify). Therefore, it sounds like a short term purchase loan.