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#479711 - 01/07/06 03:34 PM HMDA Home Improvement Temp Financing
bgehres 100 Club Joined: Mar 2005 Posts: 126	We have a 6 month unsecured home improvement loan where the expected repayment source is the sale of farm ground. Is this considered temporary finacing?
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Lending Compliance

#479712 - 01/07/06 08:30 PM Re: HMDA Home Improvement Temp Financing
rlcarey 10K Club Joined: Jul 2001 Posts: 83,364 Galveston, TX	IMHO - it's a short term loan and reportable. _________________________ The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#479713 - 01/09/06 04:35 PM Re: HMDA Home Improvement Temp Financing
bgehres 100 Club Joined: Mar 2005 Posts: 126	The way I read it from post #46113, temporary financing is when the bank knows that the loan will be paid from another loan or an asset sale. Wouldn't this case fall under that "definition"?
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#479714 - 01/09/06 04:38 PM Re: HMDA Home Improvement Temp Financing
Dani York, CRCM Power Poster Joined: Apr 2005 Posts: 3,663 TN	The sale of the farm land is a source of income not permanent financing. Therefore this would be a reportable loan. _________________________ I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
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#479715 - 01/09/06 05:04 PM Re: HMDA Home Improvement Temp Financing
#12 Diamond Poster Joined: Jun 2005 Posts: 1,343	It is unsecured though, so it would only be reportable if the bank classifies it as home improvement...correct? _________________________ CRCM
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#479716 - 01/09/06 05:05 PM Re: HMDA Home Improvement Temp Financing
bgehres 100 Club Joined: Mar 2005 Posts: 126	IMO - Your permanently financing your home improvements with the sale of farm land, your obtaining a loan so you can do the improvements now and not wait 6 months. I don't see how the sale of R/E is a source of income that falls into the category of wages, christmas bonus, etc.
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#479717 - 01/09/06 05:42 PM Re: HMDA Home Improvement Temp Financing
bgehres 100 Club Joined: Mar 2005 Posts: 126	Quote: It is unsecured though, so it would only be reportable if the bank classifies it as home improvement...correct? Yes, it was classified as a home improvement loan.
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#479718 - 01/09/06 05:45 PM Re: HMDA Home Improvement Temp Financing
#12 Diamond Poster Joined: Jun 2005 Posts: 1,343	Quote: Quote: It is unsecured though, so it would only be reportable if the bank classifies it as home improvement...correct? Yes, it was classified as a home improvement loan. Then I would report it. _________________________ CRCM
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#479719 - 01/09/06 06:07 PM Re: HMDA Home Improvement Temp Financing
Princess Romeo Power Poster Joined: Jun 2001 Posts: 8,272 Where the heart is	Quote: IMO - Your permanently financing your home improvements with the sale of farm land, your obtaining a loan so you can do the improvements now and not wait 6 months. I don't see how the sale of R/E is a source of income that falls into the category of wages, christmas bonus, etc. If the property being improved is the farm land, and this loan is for purposes of "bridging" the time between improvements and sale of the improved property, then you can probably make a good argument for "temporary" financing. This does not appear to be the case. Also, as you can see by this thread the regulatory agencies are not all that clear these days on what is and what is not temporary financing, especially when it comes to home improvement. Last edited by Bonnie M; 01/09/06 06:12 PM. _________________________ CRCM,CAMS Regulations are a poor substitute for ethics. Just sayin'
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#479720 - 01/09/06 07:28 PM Re: HMDA Home Improvement Temp Financing
Dan Persfull 10K Club Joined: Aug 2002 Posts: 47,530 Bloomington, IN	As Bonnie pointed out there is a lot of confusion and dissension in the compliance world today on temporary financing due to a bulletin put out by the FDIC KC Regional Office and a new Q&A by the FFIEC. IMO you have a temporary loan - and at this time I have the backing of the FDIC Chicago Regional office via their SCANS bulletin CHIRO-07-2002 and my district examiner. My advice is to contact your regional examiner and report, or not report, per their advice. Until an official communication is produced by the Board defining temporary financing there will no longer be any "consensual" agreement on what constitutes temporary financing. _________________________ The opinions expressed are mine and they are not to be taken as legal advice.
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#479721 - 01/09/06 07:54 PM Re: HMDA Home Improvement Temp Financing
bgehres 100 Club Joined: Mar 2005 Posts: 126	I agree with Dan. My next question would be, how is this different from a "splash and dash" loan. Wouldn't they be repaid from the sale of an asset? When the next person buys the house there's probably a 99% chance they're going to obtain a loan to buy the house. Wouldn't this distort the data by "counting it twice". In my opinion, these types of loans are not what the regulation was intended to monitor.
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#479722 - 01/09/06 08:20 PM Re: HMDA Home Improvement Temp Financing
Princess Romeo Power Poster Joined: Jun 2001 Posts: 8,272 Where the heart is	Quote: In my opinion, these types of loans are not what the regulation was intended to monitor. And this is what happens when a bureaucratic reading of regulation gets in the way of the spirit. See the discussion on ISB banks trying to get credit for Community Development Loans. _________________________ CRCM,CAMS Regulations are a poor substitute for ethics. Just sayin'
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