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#2169434 - 03/21/18 07:14 PM Temporary Financing
Somer Offline
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Joined: May 2013
Posts: 43
Is this considered temporary financing and not HMDA reportable.

Financing a loan to a developer to both purchase a dwelling, which will be torn down and to construct two condo units which will be sold upon completion.

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#2169438 - 03/21/18 07:22 PM Re: Temporary Financing Somer
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,622
We had a huge debate on this topic a while back. https://www.bankersonline.com/forum/ubbt...-torn-down-hmda

Most on here will look at the "forward use" of the building and say it is not reportable. The reasoning is that the structure is not goingto be used as a dwelling and the spec homes (condos) are not reportable due to the 2017 HMDA final rule. As you will see in the referenced thread, there have been some conflicting responses from the CFPB, so you will need to pick a method and be consistent.
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#2169467 - 03/21/18 08:08 PM Re: Temporary Financing Adam Witmer
Somer Offline
Junior Member
Joined: May 2013
Posts: 43
When I read the 2018 HMDA getting It Right Guide listed on page 34 are four examples for temporary financing. The last example states that a loan to an investor to purchase a home, renovate it and sell is "Not" temporary financing because the loan is not designed to be "replaced by" separate permanent financing. Am I misunderstanding this example to be the same as my question.

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#2169472 - 03/21/18 08:13 PM Re: Temporary Financing Somer
raitchjay Offline
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Joined: Oct 2009
Posts: 8,729
OK
But that's not your scenario.....they're not buying a home to flip it....they're buying a "home" (really, just an abandoned building) to raze it and construct spec homes.
Last edited by raitchjay; 03/21/18 08:16 PM.
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#2169473 - 03/21/18 08:14 PM Re: Temporary Financing Somer
raitchjay Offline
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Joined: Oct 2009
Posts: 8,729
OK
Razing a building/dwelling and starting all over is not an example of a flip ("purchase a home, renovate it, and sell it").
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#2169496 - 03/21/18 09:47 PM Re: Temporary Financing Somer
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree these are different things. (razing and flipping).

Read the link Adam provided and let us know if you still have questions.
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http://www.bankerscompliance.com

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