Thread Options
#2247784 - 01/18/21 03:52 PM Construction Loan to Rebuild
bOaty Offline
Power Poster
bOaty
Joined: Aug 2006
Posts: 4,266
Chillin an grillin
We have many construction to perm loans to rebuild homes that were destroyed in a fire.

Would the HMDA purpose be considered "purchase" even though the borrowers already own the property? Or home improvement?
_________________________
HMDAHMDAHMDAHMDAHMDAHMDA

Return to Top
HMDA

   
HMDA Academy
#2247785 - 01/18/21 04:17 PM Re: Construction Loan to Rebuild bOaty
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,315
Galveston, TX
It might depend. If there is currently a dwelling or at least part of a dwelling, you might considered it Home Improvement. - Otherwise it is pretty much a ground up build.

(i) Home improvement loan means a closed-end mortgage loan or an open-end line of credit that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which the dwelling is located.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2247788 - 01/18/21 09:36 PM Re: Construction Loan to Rebuild bOaty
bOaty Offline
Power Poster
bOaty
Joined: Aug 2006
Posts: 4,266
Chillin an grillin
That scenario is not usually the case. Typically, there is not structure on the property and it is a ground up build.

In that case would the purpose be "other"?
_________________________
HMDAHMDAHMDAHMDAHMDAHMDA

Return to Top
#2247789 - 01/18/21 09:43 PM Re: Construction Loan to Rebuild bOaty
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,315
Galveston, TX
I am not sure why it would be "other". If all they have left is just a piece of bare ground after the fire, I am not sure why this situation would be any different than any other transaction where the borrowers own a bare lot and want to build a house on it.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2247790 - 01/18/21 10:00 PM Re: Construction Loan to Rebuild bOaty
bOaty Offline
Power Poster
bOaty
Joined: Aug 2006
Posts: 4,266
Chillin an grillin
I was going off the assumption that this wouldn't be a purchase since the borrower already owns the property.
_________________________
HMDAHMDAHMDAHMDAHMDAHMDA

Return to Top
#2247791 - 01/18/21 10:23 PM Re: Construction Loan to Rebuild bOaty
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,315
Galveston, TX
Well, if I have previously owned a piece of bare ground and decide to build a house, that is considered a purchase transaction under HMDA is it not?

I think a harder question to answer is if there is also a current loan that is being refinanced at the same time they are building a new house is whether that previous loan would be considered an existing, dwelling-secured debt obligation, if the dwelling is no longer there?

It sort of makes your head swim.

This might be worth a call to your EIC to run the various scenarios by them for their opinion.


(p) Refinancing means a closed-end mortgage loan or an open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2247792 - 01/18/21 10:53 PM Re: Construction Loan to Rebuild bOaty
bOaty Offline
Power Poster
bOaty
Joined: Aug 2006
Posts: 4,266
Chillin an grillin
Yes, it does make your head swim! Thanks for talking this through with me.
_________________________
HMDAHMDAHMDAHMDAHMDAHMDA

Return to Top
#2247808 - 01/19/21 05:58 PM Re: Construction Loan to Rebuild bOaty
raitchjay Online
Power Poster
Joined: Oct 2009
Posts: 8,728
OK
FWIW, i agree with a purchase designation.
_________________________
I'm fixin' to fix that.

Return to Top

Moderator:  SMQ, CRCM