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 loanâ€
in the appropriate subitem of Schedule RC-C, part I, item 1.a