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#2274956 - 08/30/22 09:04 PM Loan Pays off 1x Close before Perm Period-Purpose?
Help! Compliance Offline
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Joined: Oct 2012
Posts: 94
San Antonio, TX
We have a Borrower who wants to refinance their 1x Close loan into another product before it goes to perm. Currently, the subject application is reported on the HMDA LAR as a 31 (limited/no cash-out refi), but with it paying off the 1x Close loan before the perm period, shouldn't it be reported as a purchase (1)? Thanks for your incite...

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#2274958 - 08/30/22 09:17 PM Re: Loan Pays off 1x Close before Perm Period-Purpose? Help! Compliance
raitchjay Offline
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So, you closed a construction-perm loan and now they want to refinance it. Since the 1st loan wasn't temporary, i don't see how this would be reported as anything but a refinance, with the information provided. This loan isn't replacing a temporary loan, so the guidance on purchases wouldn't apply in regards to replacing a construction only loan.
Last edited by raitchjay; 08/30/22 09:24 PM.
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#2274959 - 08/30/22 09:22 PM Re: Loan Pays off 1x Close before Perm Period-Purpose? Help! Compliance
raitchjay Offline
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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.

The key there is "that replaces a construction-ONLY loan". If it's replacing a construction-perm loan, then the purchase designation is no longer in play. The fact that they didn't hit the perm phase of the 1st loan doesn't change what the loan was.
Last edited by raitchjay; 08/30/22 09:31 PM.
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#2274965 - 08/30/22 09:57 PM Re: Loan Pays off 1x Close before Perm Period-Purpose? raitchjay
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San Antonio, TX
Thanks for the confirmation. I appreciate your help.

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