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#2263190 - 12/03/21 06:25 PM Bridge Loan or Short-Term
crcmnot Offline
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Joined: Sep 2016
Posts: 351
Trying to determine if the below scenario is considered a bridge loan or short-term:

Borrower owns primary residence, a secondary residence (vacation home) and a lot loan. Primary and secondary residences have mortgages with other lenders; lot loan is with us. We are refinancing both external residence loans and paying off our lot loan and rolling into a new 12 mth interest-only loan. This will give the borrower time to sell one of their residences, pay down our new 12-mth loan and then find permanent financing for our remaining loan balance elsewhere. Is this considered a bridge loan?

I looked at the examples for bridge loans but they refer to the 'purchase' of a new home. This borrower is not purchasing a new home as they already own both but are selling one.

We are a non-HMDA reportable bank but I still have to track eligible loans to ensure we don't go over the threshold so I am trying to determine if this loan would be exempt from my HMDA tracking as it would qualify as a bridge loan.

Thank you!

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#2263192 - 12/03/21 06:28 PM Re: Bridge Loan or Short-Term crcmnot
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
Your loan is designed to be replaced by permanent financing - IMHO.
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#2263197 - 12/03/21 06:40 PM Re: Bridge Loan or Short-Term rlcarey
crcmnot Offline
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Joined: Sep 2016
Posts: 351
Thanks Randy. I wasn't sure if the 'for the purchase' part of the bridge examples had any bearing on the exemption so wanted to check!

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#2263199 - 12/03/21 07:00 PM Re: Bridge Loan or Short-Term crcmnot
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
To expand on Randy's comment I don't think you have a bridge loan but since the loan is structured to be repaid through a refinancing it would be exempt as temporary financing.

Paragraph 3(c)(3)
1. Temporary financing. Section 1003.3(c)(3) provides that closed-end mortgage loans or open-end lines of credit obtained for temporary financing are excluded transactions. A loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2263201 - 12/03/21 07:06 PM Re: Bridge Loan or Short-Term Dan Persfull
crcmnot Offline
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Joined: Sep 2016
Posts: 351
Thank you for the expanded explanation.

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