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#2271636 - 06/14/22 06:16 PM Home Purchase?
jel99 Offline
Junior Member
Joined: Sep 2021
Posts: 27
For this scenario, Company A is "selling" multiple properties (bought with cash a couple months ago) to Company B. However, both companies are owned by the same person, the only difference is that Company B has a new co-owner.

Personally, I am leaning towards purchase because it is under two different entity's, not taking account of the owners, and excluding it from being a Refi.

Lastly, the home is being rented until the leases are up in a few months where then the dwelling will be used as a vacation rental on Airbnb. To myself, since this is not guaranteed & not currently an Airbnb at closing, this a dwelling. However, others may argue the other side and I was hoping to see some opinions on this aspect as well.

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#2271652 - 06/14/22 09:09 PM Re: Home Purchase? jel99
raitchjay Offline
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Joined: Oct 2009
Posts: 8,825
OK
As to the first part of your question, i would call it a purchase as it sounds like the deed to the property will be transferred from Company A to Company B, some common ownership in the 2 properties notwithstanding.

As to the 2nd part of your question, i'm not mentally yet totally on board with the whole "loan to buy a structure (home) and tear it down and replace it with a convenience store is a reportable purchase for HMDA" idea, but if you are, then i guess you'd still report it as a purchase.
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#2271710 - 06/15/22 06:04 PM Re: Home Purchase? jel99
compgal21 Offline
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Joined: Jan 2021
Posts: 40
What do you mean by "this is not guaranteed". Have the borrowers expressed this purpose is their full intention or were they just "thinking" about it?

Personally, if they were converting the homes into nightly rentals - I would not report it. If the property is rented nightly, on weekends, or week-to-week, I would consider that not a dwelling due to transitory use.
Last edited by compgal21; 06/15/22 06:23 PM.
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#2271715 - 06/15/22 06:35 PM Re: Home Purchase? jel99
raitchjay Offline
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Joined: Oct 2009
Posts: 8,825
OK
Compgal, i've always agreed with that thought as well......i guess you'd call it the "forward look" approach--what is the plan for the property? But, there's been a lot of talk about how the CFPB is instructing lenders to report such loans because of the existence of the "dwelling" (i guess you might call it the "frozen in time" approach) at the time of consummation. Such instructions go against all of my instincts and all of the previous guidance i know of.....but it appears to be what they want. Thus, the reason i answered as i did.
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#2271742 - 06/16/22 01:50 PM Re: Home Purchase? raitchjay
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,951
Bloomington, IN
Previous discussion on the "bright line" test.

When these new FAQs came out a lot of us had change our previous thinking that we followed for years.

For the original post:

1. It is currently a dwelling;
2. There is no guarantee the dwelling will be converted to the AirBNB

Based on the guidance from the FAQ I will side with the opinion it is a dwelling purchase transaction.
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The opinions expressed are mine and they are not to be taken as legal advice.

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