The loan is a Refi of their current Primary Residence to make improvements in order to sell it. Term is 9 months single pay. Loan docs state that if the home is not sold w/in 9 months then we will renew/modify for an additional 90 days.

Would you consider this temporary?

I know when we're dealing with a purchase/improvement loan I'd consider this short term and report it but this is a refinance so I'm a little gray.

Then I start thinking about Rate Spreads and Escrow and yes, we've already exceeded the Rate Spread threshold so it would need escrow but it's short term, so how in the heck am I supposed to collect. So does that mean it wasn't supposed to be a reportable loan to begin with?? Reg Z says that I can be exempt from escrowing if this loan is "temp or bridge with a loan term not to exceed 12 months.."

I'm stumped and I'm going in circles on this one.

Your loan doesn't seem like a bridge loan to me, as it isn't financing the purchase of their new primary residence. The primary source of repayment seems to be selling the home after making the improvements (even the caveat of renewing/modifying wouldn't be helpful, as it seems the plan would simply be to renew until it DID sell); i'd be inclined to report it.

We no longer escrow, so i'm afraid i can't help you with the short-term loan escrow question.

This is not a bridge or construction loan. It's not 2 phase financing. It's a short term home improvement loan.