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#2228816 - 01/10/20 09:38 PM Equity loan to build home
Dodge Offline
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Joined: Mar 2010
Posts: 238
What would the HMDA loan purpose be for a loan secured by a dwelling that had no outstanding liens for the purpose of building another home. Would it be Equity or Purchase? It is a consumer purpose loan.

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#2228817 - 01/10/20 09:40 PM Re: Equity loan to build home Dodge
raitchjay Offline
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Joined: Oct 2009
Posts: 8,727
OK
3. Construction and permanent financing. A home purchase loan includes both a combined construction/permanent loan 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. A home purchase loan does not include a construction-only loan or line of credit that is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time or that is extended to a person exclusively to construct a dwelling for sale, which are excluded from Regulation C as temporary financing under § 1003.3(c)(3). Comments 3(c)(3)-1 and -2 provide additional details about transactions that are excluded as temporary financing.
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#2230168 - 02/03/20 10:56 PM Re: Equity loan to build home Dodge
ckme Offline
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ckme
Joined: Sep 2002
Posts: 244
Let me piggyback this with a change in the scenario. When you have an application to purchase a second home that will be secured by a cash out refinance (no existing mortgage) of the primary residence, is the purpose "home purchase" or "other"? I know the property securing the loan will be used for occupancy, geocoding, lien, etc. BUT the purpose is throwing me off today. This was withdrawn, but we were not taking a lien of the second home and dont even know where it was going to be.

Thanks for the help!!!

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#2230171 - 02/03/20 11:28 PM Re: Equity loan to build home Dodge
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,817
It's a purchase:


2(j) Home Purchase Loan

1. Multiple properties. A home purchase loan includes a closed-end mortgage loan or an open-end line of credit secured by one dwelling and used to purchase another dwelling. For example, if a person obtains a home-equity loan or a reverse mortgage secured by dwelling A to purchase dwelling B, the home-equity loan or the reverse mortgage is a home purchase loan under § 1003.2(j).

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