First off take Randy's advice and consult the bank's attorney. Make sure you are talking to the attorney with facts and not assumptions.
the renewal note does replace the original note, because new loan agreements and loan docs are sent out to be signed.
IMO this constitutes a reportable home purchase. Converting a construction only loan to permanent financing.
However, that loan never closes, and the loan amount stays the same.
That is an internal accounting procedures and has no bearing on if the new obligation is satisfying and replacing the existing obligation.
The opinions expressed are mine and they are not to be taken as legal advice.