If a builder loan that was solely for construction of a dwelling is being refinanced with a new promissory note with new terms now that the dwelling is complete (the old construction note is being replaced) and new documents, does that constitute a refinance under the HMDA definition? Will it be reportable?

Yes. Assuming the builder loan was secured by the dwelling.

2. Loan or line of credit to construct a dwelling for sale. A construction-only loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. See comment 3(c)(3)-1.ii through .iv for examples of the reporting requirement for construction loans that are not extended to a person exclusively to construct a dwelling for sale.

I agree with IR with the additional assumption the new loan is being structured to be paid off when the home sells. The new loan is no longer a construction only loan.

Thank you.

I believe this would be reported as a purchase, not a refinance:

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.

Good point hmdagal and I agree.

From the FAQ for additional support.

2. My financial institution originated a construction only loan to a builder exclusively to construct a dwelling for sale. My financial institution determined this loan was not HMDA reportable, as it was considered temporary financing under comment 3(c)(3)-2. After origination of the loan and construction of the house, the builder has not been able to find a buyer for the home, and would like to replace the first loan with a permanent loan and rent out the house. Is either the first or the second loan HMDA reportable?

In regard to the first loan, the fact that the house was not sold after construction, and permanent financing was unexpectedly obtained, does not render the construction-only loan reportable. However, the financial institution must report the second loan as a home purchase loan because it is permanent financing that replaces a construction-only loan under comment 2(j)-3.

Updated Nov. 14, 2018

To bring this topic to light again - we don't do construction to perm loans but do single construction loans transactions. We have a construction loan to a builder who is now done with the construction but does not have a buyer. We are renewing (refinancing with a new note, etc...) to give the builder more time to sell the house. The original loan did have the builders primary residence as collateral (abundance of caution). I would think I would need to report this as a refinance for HMDA purposes correct?

I read in another post from Kathleen Blanchard that, "Unless the builder is obtaing permanent financing from you, those construction loanss are not HMDA reportable. The loan and any refinances intended as extensions of the construction phase remain temporary loans and not reportable."

In our case the construction is done. HMDA=Refinance

We are renewing (refinancing with a new note, etc...) to give the builder more time to sell the house.

You are refinancing the construction loan into a short term loan, not a temporary loan. The loan will be repaid from the sale of the home not another loan. IMO this would be reportable as a purchase.

The loan may be a short term loan but it is the permanent loan for this construction loan. If you have to end up refinancing this loan because the house did not sell then at that time it would be a refinancing.

Dan, thank you for your response. Are you thinking a purchase because the original construction loan did not have a dwelling initially and one can't refinance something that wasn't originally there?

2. Loan or line of credit to construct a dwelling for sale. A construction-only loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. See comment 3(c)(3)-1.ii through .iv for examples of the reporting requirement for construction loans that are not extended to a person exclusively to construct a dwelling for sale.

The refinancing of that loan would not be a loan exclusively to construct a dwelling for sale and the repayment of that loan is based on the sale of the home. That loan has now become a short term perm loan and not a temporary loan IMO..