1026.43 allows construction purpose loans of 12 months or less to be exempt from complying with ATR. It also says that the 12 month construction loan can be renewable for another 12-month period before permanent financing begins and maintain the ATR exemption. How many renewals can take place? Could a 12 month construction loan be renewed 4 times for a period of 3 months each and still maintain the exemption or can it only be renewed one time not to exceed 12 months?

The way the commentary of .43(a)(3) reads as long as your loan term is no longer than 12 months the new or renewed temporary/bridge/construction loan will be exempt from the ATR provisions. You could have 12 1-month renewals and still be fine.

What you CAN'T do is to build an auto-renew into the mix so that the contractual term of the construction loan becomes longer than 12 months. Each renewal has to be for 12 months or less. And, just to ensure that you don't slip outside the 12-month limit, check the maturity date of the note to make sure it's not bumped out to longer than 12 months due to scheduling of the first and subsequent payments. For example, if your practice is to schedule the interest-only payments on construction loans on the first of the month, and you close on such a loan (or its renewal) on the 5th of July 2016, with a first interest payment on September 1, 2016, don't make the maturity date any later than July 5, 2017.

Does the temporary loan exemption apply to only bridge loans narrowly defined in .43(a)(3) or could a 12 month loan secured by their dwelling to buy a lot be exempt because it is only 12 months? It is not a bridge loan per se, but after they pay off this loan in 1 year they will construct a dwelling. Not sure which lot, as the 2 lots are adjacent. they are living in the "living space inside the pole barn" which was appraised as a dwelling, so unless there is a way around that, I see that as a dwelling.

Can this 12 month loan meet the temporary loan exemption?