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#641406 - 11/22/06 07:05 PM Temporary Financing - Opinions Please!!
Maxx Offline
Diamond Poster
Joined: May 2006
Posts: 2,476
USA
I have a customer that orginally had a loan that was for Business Purpose: purchase equipment. It was secured by a separate security agreement that specifically listed their 1998 mobile home. This loan has been refinanced (old loan paid off and replaced with new) to become interest only payments (customer is having cash flow problems due to slow down in business). The new loan is for 6 months and will be refinanced into a regular pay loan after this. I feel that this is a "bridge" loan and therefore temporary financing and not reportable. Anyone disagree? agree? Or should it be considered a refinance now and reportable now and reportable again later when it refinances again? HELP!!

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#641408 - 11/22/06 07:14 PM Re: Temporary Financing - Opinions Please!! Maxx
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Sounds temp to me too since it will be repaid from other permanent financing...
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#641686 - 11/23/06 12:15 AM Re: Temporary Financing - Opinions Please!! RR Joker
David Dickinson Offline
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David Dickinson
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Central City, NE
Since you plan to replace this loan with a new loan in 6 months, I would not report this loan. I believe the intent of HMDA is to not double report. I agree that this is not a construction or bridge loan, but the revised FFIEC Q&A's state those are "illustrative, not exclusive examples of temporary financing".
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#642265 - 11/27/06 02:10 PM Re: Temporary Financing - Opinions Please!! David Dickinson
Georgia Golfer Offline
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1st Tee
David-

What's your opinion on spec homes? I/O 12 months loans to a builder to construct & sell a single family residence. Our external auditor is saying that these loans are now reportable because they are no longer "temp" loans.

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#642298 - 11/27/06 02:55 PM Re: Temporary Financing - Opinions Please!! Georgia Golfer
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,030
Bloomington, IN
The initial loan for a spec house should still fall under the construction loan exemption. However, if the house does not sell and you have to refinance it then it will fall within the reporting requirements.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#642304 - 11/27/06 03:07 PM Re: Temporary Financing - Opinions Please!! Dan Persfull
RR Joker Offline
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RR Joker
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Posts: 20,654
The Swamp
Yes, agree with Dan's explanation. Construction only loans continue to be exempt.
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#642320 - 11/27/06 03:27 PM Re: Temporary Financing - Opinions Please!! RR Joker
#Just Jay Offline
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#Just Jay
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
GG...I agree with the above folks, exempt.

I hope your auditors are not looking just at timeframe as their only consideration to determine if a loan is temp or not. Purpose and intent are just as important in that determination. A temp loan can be over a year in length, especially in some of these builder specs situations in this softening real esate market where they might not be turing over as quickly as they once did.
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#642986 - 11/28/06 03:27 PM Re: Temporary Financing - Opinions Please!! Georgia Golfer
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Originally Posted By: Georgia Golfer
David-

What's your opinion on spec homes? I/O 12 months loans to a builder to construct & sell a single family residence. Our external auditor is saying that these loans are now reportable because they are no longer "temp" loans.

I agree with Dan, Joker and bbsgrant. A construction is not to be reported [see 203.4(d)(3)]. A speculation home is a construction loan, and therefore exempt.
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David Dickinson
http://www.bankerscompliance.com

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