Borrower has multiple rental (dwelling) loans at a low rate with our bank that do not rate adjust until 2026.

He requested additional credit of $50k for improvements to these rental properties. Lender created a $50k line of credit that we renew (refinance) annually in 2024 and 2025. The intention is that in 2026 when the rental loans are set to rate adjust again, the line of credit will be refinanced and replaced by the new term loans.

I'm getting hung up determining if this is temporary financing since the intention is to be replaced by a longer term loan, eventually. But what about the renewal (refinance) of this LOC in 2024 and 2025? Would all 3 of these be temporary since the intent is there to replace them by term financing in 2026? Or would each of them be reported as HMDA improvement loans?

Define "Line of credit" - you mean a closed-end draw note or a revolving line of credit? If the intention that the loan would be refinanced in 2026 with the remainder of the customer's portfolio, why was the loan only made for one year? Either way, I would have a hard time seeing this as a temporary loan.

The line of credit is revolving, and we do report revolving to HMDA as we are over the threshold.

I'm assuming the line was made for 1 year as our credit department strongly discourages commercial revolving lines over 12 months.

I also initially instructed them to report as I wasn't sure I could make an argument for this being temporary, but I started to question myself.