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#1993784 - 02/05/15 04:47 PM Construction to Perm Loan - when to report?
VolFan Offline
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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
Dan Persfull Offline
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It's your option. See page D-9 of the GIR.
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#1993827 - 02/05/15 05:45 PM Re: Construction to Perm Loan - when to report? VolFan
VolFan Offline
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Thank You!!

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#1997024 - 02/19/15 08:24 PM Re: Construction to Perm Loan - when to report? VolFan
Mel in WA Offline
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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
Mel in WA Offline
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Bump

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#1997318 - 02/20/15 05:41 PM Re: Construction to Perm Loan - when to report? VolFan
Dan Persfull Offline
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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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#2054109 - 12/14/15 10:18 PM Re: Construction to Perm Loan - when to report? VolFan
PorcelainDoll Offline
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The West
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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#2054112 - 12/14/15 10:47 PM Re: Construction to Perm Loan - when to report? VolFan
PorcelainDoll Offline
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The West
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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#2054181 - 12/15/15 03:34 PM Re: Construction to Perm Loan - when to report? VolFan
David Dickinson Offline
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Porcelain: It sounds like you are doing 2 phase financing. I make this determination by your reference to a concern that the permanent financing may not actually happen. If I'm right, then you don't have an option to report the construction phase closing/settlement date. That loan is exempt from HMDA. You only get to report the date of the 2nd loan closing (the permanent loan).

Comment #6 to ยง10003.4(a)(8) (page D-9 of the GIR) states: For a construction/permanent loan, the institution reports either the settlement or closing date, or the date the loan converts to the permanent financing.
This is reference to a ONE time closing (construction/permanent loan).
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#2054281 - 12/15/15 07:33 PM Re: Construction to Perm Loan - when to report? VolFan
Dan Persfull Offline
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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.
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#2054900 - 12/18/15 12:39 PM Re: Construction to Perm Loan - when to report? VolFan
PorcelainDoll Offline
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Tanks Dan and David for your responses! I think I've got it! smile
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#2062718 - 02/05/16 05:05 PM Re: Construction to Perm Loan - when to report? VolFan
Patricia Offline
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Kansas
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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#2062727 - 02/05/16 05:15 PM Re: Construction to Perm Loan - when to report? VolFan
David Dickinson Offline
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You only take 1 application - the initial request for credit (as defined in Reg B & C). The updated application form is not a request for credit. It's an updated attestation to see if anything has changed. You might call it an application, but it doesn't meet the regulatory definitions. It's just on a piece of paper called an "application".

All regs are triggered by the original request. Your institution broke their request into 2 phases. You should have already given them TRID disclosures for both phases as well. HMDA looks at the initial application request as the application date. The timing between the application and the permanent loan closing is the exempt (temporary) phase.
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#2062766 - 02/05/16 06:21 PM Re: Construction to Perm Loan - when to report? VolFan
Patricia Offline
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Kansas
Thanks David.

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#2070004 - 03/18/16 06:38 PM Re: Construction to Perm Loan - when to report? VolFan
jmyhmda Offline
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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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#2070112 - 03/19/16 10:55 PM Re: Construction to Perm Loan - when to report? VolFan
David Dickinson Offline
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Central City, NE
The attestation is NOT an application. Therefore, you would report the income from the application used to make the decision to grant the credit - the initial applicant request.
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#2070139 - 03/21/16 01:16 PM Re: Construction to Perm Loan - when to report? VolFan
jmyhmda Offline
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Thank you David!

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#2075803 - 04/26/16 08:34 PM Re: Construction to Perm Loan - when to report? VolFan
George Offline
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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
Dan Persfull Offline
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Bloomington, IN
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.
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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
George Offline
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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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#2075984 - 04/27/16 05:45 PM Re: Construction to Perm Loan - when to report? VolFan
David Dickinson Offline
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Central City, NE
I don't believe I've ever said to report when the loan converts. In fact, I agree with Dan's comments. I think the best time to report is the original closing.
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#2076246 - 04/28/16 08:23 PM Re: Construction to Perm Loan - when to report? VolFan
George Offline
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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
Dan Persfull Offline
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Bloomington, IN
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.
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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
Dan Persfull Offline
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Bloomington, IN
Based on the Help section of the calculator I would use 7 years since that is the initial fixed rate period.
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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
George Offline
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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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