I have managed to totally confuse myself. Do I have this correct?

1. Construction- permanent loan (one closing) to a consumer who already owns the lot- reportable as a purchase at the time the loan is booked

2. Construction- permanent loan (one closing) to a consumer includes purchase of the lot- reportable as a purchase at the time the loan is booked

3. Construction only loan to a consumer for their dwelling- exempt from HMDA reporting

4. Construction loan to a builder for a spec house- exempt from HMDA reporting

I agree with you concerning 1, 2 & 4. #3 IS reported. Temporary financing is only when there are 2 phases. Since #3 says "construction only", you must report these as a short term "purchase".

A loan or line … is considered temporary financing and excluded… if the loan or line… is designed to be replaced by permanent financing at a later time (i.e., two-phase financing). [Commentary to §1003.3(c)(3) #1]

Since your loan doesn't have 2 phases, it is not exempt. Here's some more commentary to support this:

A home purchase loan does not include a construction-only loan (construction phase) that is designed to be replaced by permanent financing at a later time… [Commentary to §1003.2(j) #3] A new extension of credit for permanent financing for the dwelling will be obtained, either from Lender A or from another lender… The initial construction loan (construction phase) is excluded as temporary financing… [Commentary to §1003.3(c)(3) #1(ii)] The initial construction loan, including any renewal thereof, is excluded as temporary financing… [Commentary to §1003.3(c)(3) #1(iii)]


If you were talking about today's rule (2017), I would agree that construction only loans are not reported, but this is changing in 2018.

Do WHAT?

A new extension of credit for permanent financing for the dwelling will be obtained, either from Lender A or from another lender… The initial construction loan (construction phase) is excluded as temporary financing…

Now, if no permanent was to happen, I'd agree, but I have a feeling that doesn't happen to often and probably wasn't the intention of the question above.

I'm not following you Joker.

I understood Example #3 to be "construct only". Maybe the borrower is cashing in stocks/CD's, etc. to pay off the construction loan. That is a reportable loan in 2018.

If they are doing construction and then obtaining perm financing (either from Lender A or another lender) than this is 2 phase financing and not reported because it is temporary. I agree with that, but that's not the scenario given in #3. They gave those in scenario #1 and 2.

Thanks David, that helps a lot.

Sorry, Miss Irma chased me a way for a couple days.

I'd say that would be extremely rare, David and didn't appear [to me] to be what the OP intended, as there was no additional category for a two-close situation or construction with perm takeout. I could be wrong, but I believe I correctly clarified in my post, that "if no permanent was to happen, I'd agree".

Take a look back - Scene 1 and 2 are both directed at one close situations.

Glad you're back Joker. I hope everyone is safe.

I agree a construction only is very rare. I also understand what you are saying about OP's scenario #1 & #2.

IF #3 is supposed to be Construction ONLY - then it is NOT exempt from HMDA.
IF #3 is supposed to be "we do the construction and then we do a perm loan" - then the construction phase is exempt. The perm loan is reported as a "purchase".

I hope we all agree to this synopsis.

Absolutely!! and thank you!

I'm sorry I'm confused here...how is #1 a "purchase"? Borrower owns the lot free and clear, there's no buying of anything right? Why wouldn't it be "Other Purpose" HMDA code #4?

They're purchasing a house with the loan. They may be purchasing it piece by piece and having it constructed, but it's still a purchase.

burke is right. I think of it two ways:
They are purchasing the wood, shingles and brick/block; or
The house previously didn't exist. They didn't have a house before (at least at this address). So they are purchasing a home to be "put" on the land they already own.

If you need the regulatory citation, here it is:
A home purchase loan includes both a combined construction/ permanent loan[ (one closing) ]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 (i.e. two-phase financing). [Commentary to §1003.2(j) #3]