I'm going to chip in on this with a slightly different viewpoint. I think the loan is subject to the temporary loan exemption. HUD's definition is:
Temporary financing. Temporary financing, such as a construction loan. The exemption for temporary financing does not apply to a loan made to finance construction of one- to four-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender or is used to finance transfer of title to the first user. If a lender issues a commitment for permanent financing, with or without conditions, the loan is covered by this part. Any construction loan for new or rehabilitated one- to four-family residential property, other than a loan to a bona fide builder (a person who regularly constructs one- to four-family residential structures for sale or lease), is subject to this part if its term is for two years or more. A “bridge loan” or “swing loan” in which a lender takes a security interest in otherwise covered one- to four-family residential property is not covered by RESPA and this part.
The test is exclusively whether the financing is temporary. Temporary is measured by whether there is an underlying legal obligation to extend the loan or renew it in the form of a mortgage. There is no purpose test here, so the customer's use of the loan proceeds is not relevant. Since neither the lender nor the borrower is under any legal obligations at the end of the loan's short term, there is no loss of the exemption here.