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#1993784 - 02/05/15 04:47 PM
Construction to Perm Loan - when to report?
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100 Club
Joined: Aug 2006
Posts: 144
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When should a construction to perm loan be reported for HMDA - when the loan first books or when it converts to permanent financing?.
Thanks!
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#1993788 - 02/05/15 04:51 PM
Re: Construction to Perm Loan - when to report?
VolFan
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10K Club
Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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It's your option. See page D-9 of the GIR.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1993827 - 02/05/15 05:45 PM
Re: Construction to Perm Loan - when to report?
VolFan
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#1997024 - 02/19/15 08:24 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Diamond Poster
Joined: Mar 2013
Posts: 1,302
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We are reporting residential construction loans at settlement/closing and commercial construction loans when the loan converts to permanent financing. We're consistent by loan type. Is that acceptable?
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#1997316 - 02/20/15 05:37 PM
Re: Construction to Perm Loan - when to report?
VolFan
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#1997318 - 02/20/15 05:41 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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Yes assuming you are doing 2 closings. If you are doing one time closings then if the permanent phase crosses over to the next calendar year then you must report the loan on the LAR in the year it closed. This is explained on page D-9 of the GIR.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#2054109 - 12/14/15 10:18 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Member
Joined: Sep 2015
Posts: 93
The West
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Need to refresh this thread. We have our first construction to permanent commercial loan and need some advice. The credit memo indicates that two credit facilities were approved. Facility A is the construction loan for 18 mos. Facility B is a 15 year permanent loan. The primary repayment for Facility A is Facility B.
The HMDA Getting It Right Guide indicates that we can report the settlement/closing date or the date the loan converts to permanent financing. It seem safer to report the closing date of the construction loan than to wait and see if the borrower actually uses our loan for the permanent financing. I'm concerned about having a tickler system for these situations and that the permanent financing might be missed somehow.
Is this approach acceptable?
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PorcelainDoll CRCM
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#2054112 - 12/14/15 10:47 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Member
Joined: Sep 2015
Posts: 93
The West
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Dan (or others),
You mentioned in another post that your shop does not report until the permanent financing takes place. What mechanism is in place to make sure that the permanent financing is reported as "approved by not accepted" in a situation where the borrower decides to get the permanent financing elsewhere? How does your department know to report it?
I'm concerned about human oversight in this situation. It would be easy to forget to report and result in a violation.
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PorcelainDoll CRCM
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#2054281 - 12/15/15 07:33 PM
Re: Construction to Perm Loan - when to report?
VolFan
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10K Club
Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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How does your department know to report it?
When the construction loan is paid off by funds from sources other than our approved permanent loan.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#2054900 - 12/18/15 12:39 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Member
Joined: Sep 2015
Posts: 93
The West
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Tanks Dan and David for your responses! I think I've got it!
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PorcelainDoll CRCM
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#2062718 - 02/05/16 05:05 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Gold Star
Joined: Mar 2011
Posts: 335
Kansas
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For 2 time construction loans --- for the application date do we use the "date received" on the construction loan application or the" date received" on the perm loan application?
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#2062766 - 02/05/16 06:21 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Joined: Mar 2011
Posts: 335
Kansas
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#2070004 - 03/18/16 06:38 PM
Re: Construction to Perm Loan - when to report?
VolFan
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New Poster
Joined: Jan 2013
Posts: 10
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In this example what income would you report on the HMDA LAR? The income at initial application or the updated income amount gathered from the attestation?
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#2070139 - 03/21/16 01:16 PM
Re: Construction to Perm Loan - when to report?
VolFan
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#2075803 - 04/26/16 08:34 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Gold Star
Joined: Apr 2016
Posts: 364
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David, your recommendation is to wait to report on ONE TIME closings until the permanent phase starts, correct? So if I have a loan that closed in March with a 6 mth. interest only phase, then converts to a 20 year amortization, I can wait until September to put it on our LAR per HMDA, using the September "conversion" date?
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#2075881 - 04/27/16 02:08 PM
Re: Construction to Perm Loan - when to report?
VolFan
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10K Club
Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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David, your recommendation is to wait to report on ONE TIME closings until the permanent phase starts, correct?
Maybe I missed it but I didn't see where David made this recommendation.
If we did one-time closings we would report based on the closing date because then we wouldn't have to worry about the permanent phase crossing over into the next calendar year.
We do two-time closings and we report based on the closing date of the permanent loan because as David mentioned earlier the construction loan is a temporary loan and exempt from reporting.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#2075919 - 04/27/16 03:42 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Gold Star
Joined: Apr 2016
Posts: 364
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Dan, my apologies, I may have misread. I have been reading so many threads that my eyes are going crossed! Two-time closings I have a firm grasp on when to report. One-time closings, however, not sure what the best route is. But what you said makes sense about reporting when it closes. Thank you sir!
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#2076246 - 04/28/16 08:23 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Gold Star
Joined: Apr 2016
Posts: 364
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I'm back with some more questions on how to report this. But first, I apologize for mis-quoting you, David!
So if I am going to report this loan now as opposed to when it converts to permanent, is the rate spread still required? If so, then do I just figure it as normal? Example below:
We offer nothing but ARMs. This particular loan is construction for 6 months, then converts to perm financing with an initial fixed rate term of 7 years. So when inputting the figures into the HMDA rate spread calculator, do I still just use the 7 years as the fixed period?
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#2076250 - 04/28/16 08:30 PM
Re: Construction to Perm Loan - when to report?
VolFan
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10K Club
Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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George, on the one-time closings it is really your option when to report, however you have to have safeguards in place to make sure that if you have a one-time closing in August 2016 (as an example) and the permanent phase does not kick in until Feb 2017 then the regulation requires you to report the loan on your 2016 LAR. IMO for one-time closings it is safer and more consistent to report them based on the closing date.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#2076254 - 04/28/16 08:36 PM
Re: Construction to Perm Loan - when to report?
VolFan
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10K Club
Joined: Aug 2002
Posts: 47,680
Bloomington, IN
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Based on the Help section of the calculator I would use 7 years since that is the initial fixed rate period.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#2077767 - 05/09/16 09:17 PM
Re: Construction to Perm Loan - when to report?
VolFan
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Gold Star
Joined: Apr 2016
Posts: 364
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Would I use the original application date for a 2 phase loan that is converting to permanent financing?
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