I'm gonna beat the horse just a little bit more.

And if these aren't hitting our CALL report as construction?

How are they categorized?

The two in front of me got moved to 1c2a with the first replacement note.

I would sit down with lending and finance and come up with a strategy and consistent approach to ensure accurate info on the Call Report and proper HMDA reporting.

Here is what the Call Report has to say:

All construction loans secured by real estate, other than combination construction-permanent
loans as described above, should continue to be reported in this item after construction is
completed unless and until (1) the loan is refinanced into a new permanent loan by the
reporting bank or is otherwise repaid, (2) the bank acquires or otherwise obtains physical
possession of the underlying collateral in full satisfaction of the debt, or (3) the loan is charged
off. For purposes of these reports, a construction loan is deemed to be refinanced into a new
permanent loan only if the bank originates:
• An amortizing permanent loan to a new borrower (unrelated to the original borrower) who
has purchased the real property, or
• A prudently underwritten new amortizing permanent loan at market terms to the original
borrower – including an appropriate interest rate, maturity, and loan-to-value ratio – that is
no longer dependent on the sale of the property for repayment. The loan should have a
clearly identified ongoing source of repayment sufficient to service the required principal
and interest payments over a reasonable and customary period relative to the type of
property securing the new loan. A new loan to the original borrower not meeting these
criteria (including a new loan on interest-only terms or a new loan with a short-term
balloon maturity that is inconsistent with the ongoing source of repayment criterion)
should continue to be reported as a “Construction, land development, and other land loan”
in the appropriate subitem of Schedule RC-C, part I, item 1.a

Good information in this thread, but.....

I have a construction only loan to a builder and I have to report it. Is it considered a purchase or a home improvement?

So...echoing the question above "what is the purpose" for HMDA?

My train of thought: if the builder already owns the land that the house will be built upon, no purchase is taking place. I don't think it's HMDA reportable because the proceeds are not being use to purchase.

If the builder does not already own the land, AND is using the loan proceeds to purchase the land AND construct the home, with no plans for the builder to obtain a perm financing loan, then it is HMDA reportable as a purchase.

Thoughts on this?

It would not be home improvement because no "home" exists on the grounds to be improved and improvement to grounds without a dwelling located on it would not meet the definition of home improvement.

The person constructing the dwelling is purchasing the materials to construct the dwelling therefore they are purchasing it one piece at a time.

Thanks Dan- that makes sense to me.

Yes, thank you Dan.

**ugh**
Two immediate fixes needed to the Commentary:
1. Refinancing one business purpose loan with another business purpose loan should be an excluded transaction. Most common example is an SBA loan being refinanced from another lender where there is a junior lien on the principal's home.

2. Initial construction of a dwelling should be an excluded transaction regardless of the source of repayment.

I agree to both statements Princess. Doubt we will see the 1st happen. The 2nd is possible but don't hold your breath (from my discussions with the CFPB).