Customer purchases a mobile home for their primary residence to place on their 300 acre dairy farm (sons live in the two dwellings already located on farm). Collateral is a 2nd on the farm, livestock and equipment. The mobile home is not securing the loan. Terms were draw note dated 2/2015 for $85,000 for 6 months interest payments then 8/2015 P&I term out for 5 years. Will this term out transaction be reported as a purchase like we would a Construction going to permanent?

Since it won't be secured by a dwelling, no.

There are two dwellings on the farm that the sons live in.

Oh....i missed that little tidbit. You're right, that would make it reportable as a purchase, as your loan purchases a dwelling (the mobile home) and is secured by a dwelling (actually 2 dwellings).

So the same rules apply to this temporary financing going to permanent as a construction loan going to permanent?

Ok, sorry....i was distracted......i actually think this is the same topic that has been debated for a while in this forum.....whether the refinance of a temporary HI (which is more common) or purchase loan is treated the same as a temporary construction loan later permed out (since the GIR specifically tells you to code that as a purchase). To be consistent with what i've always thought, i'd say, yes, it's reportable, but as a refinance, not a purchase (but you can find plenty of support i think if you want it to report it as a purchase).

Sorry that i didn't pay closer attention to your actual scenario from the beginning.

How could it be a refinance? We took a 2nd deed of trust, we didn't pay off a dwelling.

You did an original temporary loan, right, and then refinanced it into a perm loan, right? Or did you do a 2-phase loan that automatically rolled over into permanent financing (if this is the case, you didn't state such)?

If the former is what you did, then you did refinance the loan; otherwise, how did you end up with permanent financing?

The permanent financing was just a modification of the original note. It was just put on P&I payments.

Agree with Raitch. If this is a single close with the 2nd phase being the permanent financing I would consider a purchase. (Dwelling secured to purchase a dwelling)

If you are doing two separate loans, one now and refinancing that existing note into the 5 year P&I, that would be a refinance.

Just my opinion.

Modifications aren't reportable.

Typically, modifications are not reportable, but I ran across this -- of course, I was looking for something else at the time. While this modification may not be reportable as it doesn't seem to fit the definition described below, I am posting this here as an FYI to our readers that some are reportable. But then, I might be the only person that was surprised to learn this.


Federal Reserve
Consumer Compliance Outlook, 2nd Quarter, 2011
HMDA Q&As

8. If the bank modifies, but does not refinance, a temporary construction loan into permanent financing, does this loan become a HMDA-reportable loan?

Yes. Comment 203.2(h)-5 explains that when permanent financing replaces a construction-only loan, the loan should be reported for HMDA. In addition, construction-permanent loans must also be reported for HMDA. In essence, the bank has replaced its temporary construction loan with permanent financing through this loan modification. Because it is no longer a temporary loan and has not been previously reported, it should be reported as a home purchase loan if it meets Regulation C’s definition of home purchase.