Good Morning,

We have a customer that came to us for permanent financing that included paying off the customer's father for a construction loan (not secured by a lien on the property). Our new loan will be secured by the property (primary residence). Typically, our end loans are reported as purchases. However, since the underlying construction loan isn't dwelling-secured, should we report this loan as a "Purchase" or "Other?"

Thank you for your help!

R. Shackleford

If there is no tile transfer with your loan transaction I would report it as other.

I'm not sure if they went for tile or laminate flooring, but I will find out and report accordingly!

Okay, that was a shameless joke--I understand and thank you, Dan, for your guidance. Have a great day!

R. Shackleford.

OK....I had to read that a couple of times.....

I agree it would be 'other' in this instance as it fits no molds...BUT, title transfer doesn't necessarily happen even with normal construction to perms...so are you actually basing that just on the fact the construction phase is not dwelling secured or through a normal channel? Similar to the limitations on what qualifies as a refi [by definition]?

If that question is addressed to me my thought process was since the construction was funded by the dad then there is a possibility the property may be titled in dad's name and with the son paying off dad the title will be transferred to the son. If that's the case then I would treat it as a purchase instead of other.

gotcha...makes perfect sense...