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#2224108 - 10/22/19 01:15 PM Refi - Remodel - Perm financing
Lizard60 Offline
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Joined: Oct 2018
Posts: 22
I am still getting confused on the following situation:
Customer is going to refinance his mortgage, remodel his home (12 mth loan) and when completed will obtain permanent financing.

I'm thinking this should be not HMDA as it will be paid off w/perm financing, however, I do not see this scenario in the Reg, regarding temporary financing.

Please help.

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#2224116 - 10/22/19 01:50 PM Re: Refi - Remodel - Perm financing Lizard60
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,562
While the examples in 1003.3(c)(3) mostly relate to new builds/construction loans, your example appears to be designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time.
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.

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#2227325 - 12/13/19 01:24 PM Re: Refi - Remodel - Perm financing Lizard60
Love Cruising Offline
Joined: Dec 2019
Posts: 67
I would say this is considered temporary financing due to a 12 month loan.

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#2227369 - 12/13/19 07:36 PM Re: Refi - Remodel - Perm financing Lizard60
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,364
Bloomington, IN
The 12 month term is not a determining factor for temporary financing. The determining factor is if the loan will be replaced by permanent financing.

A 6 month construction loan that will be paid off at completion by the sale of other property or in cash is not temporary financing and would be a reportable loan.
The opinions expressed are mine and they are not to be taken as legal advice.

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#2227426 - 12/16/19 02:00 PM Re: Refi - Remodel - Perm financing Lizard60
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I want to reinforce what Dan is saying. The term of the loan has very little to do with the loan being considered temporary or not. For instance, a term of 1, 3, 6, 12 or 18 months doesn't make the loan temporary. The "short-term" loan must be followed by another "long-term" loan for the first (short) loan to be temporary.

I say "very little" because a 5 year loan replaced by a 5 year loan is not temporary.
David Dickinson

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