This is my next-to-last loan to review and I am just about brain dead.

Loan has a 15 year term and is a balloon. Purpose is to purchase an existing single family residence property, do cosmetic repairs, and sell it, paying off the loan with sale proceeds.

The borrower has no plans to rent it; the sole purpose is to flip it.

My initial conclusion is that this IS reportable, as he is purchasing a dwelling and it will be collateralized by the purchased property. It is not being treated as a construction loan; the financing is already "permanent". It is an investment property, although the investment is only to turn a profit on resale.

Am I right on this?

Well, I guess if that is the intention, why the heck did the loan officer make them a 15-year loan? Sounds like somebody played games to get them a better rate/lower fees on a higher risk loan. Great example of how fair lending issues arise in the non-consumer arena.

But regardless, I would classify this a permanent loan regardless of what the stated plans were for the future.

Your guess (the 15 year term) would be as good as mine! The borrower ultimately withdrew and went with a HELOC instead

I agree with you.

Thank you RL and Adam.