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#2161884 - 01/25/18 06:25 PM Construction loan not going perm
Winning Offline
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Joined: Sep 2015
Posts: 88
Would a construction loan that is being paid off by the sale of another home be HMDA reportable? It is a true construction draw down line of credit for 12 months. It just will not go perm at a later date. If it is reportable, how would we report it? "Other" for purpose...??

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#2161889 - 01/25/18 06:45 PM Re: Construction loan not going perm Winning
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
https://www.bankersonline.com/forum/ubbthreads.php/topics/2161326/5

Based on the conversations in the above thread and the response from the CFPB the loan would not meet the definition of temporary financing therefore it would not be exempt from reporting.

This would be a short term construction/permanent loan and reported as a purchase IMO.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2161893 - 01/25/18 06:47 PM Re: Construction loan not going perm Winning
Adam F Offline
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Adam F
Joined: Apr 2013
Posts: 420
VA
I agree with Dan unless the loan purpose is to construct a spec house. Below is from the commentary of Regulation C.

3. Construction and permanent financing. A home purchase loan includes both a combined construction/permanent loan or line of credit, and the separate permanent financing that replaces a construction-only loan or line of credit for the same borrower at a later time. A home purchase loan does not include a construction-only loan or line of credit that is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time or that is extended to a person exclusively to construct a dwelling for sale, which are excluded from Regulation C as temporary financing under § 1003.3(c)(3). Comments 3(c)(3)-1 and -2 provide additional details about transactions that are excluded as temporary financing.
Last edited by NSF, CRCM; 01/25/18 06:49 PM.
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#2161926 - 01/25/18 09:06 PM Re: Construction loan not going perm Winning
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Agree with both.

Construction only loans/lines ARE reported as a purchase.
If the same is made to a builder, it is exempt.
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David Dickinson
http://www.bankerscompliance.com

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