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#2206965 - 02/25/19 02:43 PM Not your typical Construction/Perm loan
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
We originated a loan - 25 year ARM loan - that was a cash out on a dwelling owned free and clear. The customer was using the funds to construct another dwelling to be rented which we did not take as collateral. This was not a typical construction loan that would have a construction phase with a permanent financing stage. It was permanent financing from the beginning and we did not monitor the construction of the dwelling. It was a complete cash out amortizing loan. Would it still be reportable as a purchase?
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#2206968 - 02/25/19 02:47 PM Re: Not your typical Construction/Perm loan Likes to Comply
dutchbltz Offline
100 Club
Joined: Oct 2015
Posts: 185
We would still report that as a purchase.... HMDA states that we can rely on the borrower's stated intent for the funds - in a case like this where we aren't controlling the loan proceeds, we would document what the stated intent was and report it accordingly.

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#2206985 - 02/25/19 03:57 PM Re: Not your typical Construction/Perm loan Likes to Comply
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
I agree. The loan was a construction permanent loan and those are reportable as a purchase for HMDA.
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The opinions expressed are mine and they are not to be taken as legal advice.

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