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#2302203 - 10/02/24 08:06 PM Construction Only Prem financed by another bank
Lizz Offline
100 Club
Joined: Aug 2013
Posts: 155
Dunkirk NY
During a loan file review, I found a construction-only loan that when the dwelling is completed in one year the perm financing will be with another bank. In the loan application, the mortgage originator did not complete the demographic information on the borrowers. I know that land-only loans are not HMDA reportable - but I was told by the Loan Operation Manager that this was construction only and we did not have to report this loan because we won't have the loan when the dwelling is completed. In HMDA Getting it Right - it indicated: Comment 3(c)(3)-1. A construction-only loan or line of credit is considered temporary financing and excluded under Regulation C if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. Comment 3(c)(3)-2.
I just want to be sure that this loan is not reportable. The borrowers are the ones who will be residing in the home once completed. This is n't a developer or business selling the home. The structure is already started.

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#2302205 - 10/02/24 09:06 PM Re: Construction Only Prem financed by another bank Lizz
Inherent_Risk Offline
Platinum Poster
Joined: Jan 2017
Posts: 635
Comment 3(c)(3)-1 says "A loan or line of credit is considered temporary financing and excluded under ยง 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time."

Your loan is designed to be replaced by separate permanent financing so it is not reportable. You don't need to fit into the spec home exemption in comment 2 if the loan is designed to be replaced by another loan. It fits in the general temporary financing definition.

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#2302212 - 10/03/24 12:18 PM Re: Construction Only Prem financed by another bank Lizz
Lizz Offline
100 Club
Joined: Aug 2013
Posts: 155
Dunkirk NY
Thank you!

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