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#903655 - 02/12/08 09:36 PM construction to perm again
complyorelse Offline
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Joined: Nov 2007
Posts: 448
U.S.
Dan, Is the trigger here that the construction period is over and that it is now P & I versus Interest Only?

Question: I work in commercial lending and we have several construction loans to builders that we are now having to extend the maturity date and modify the payments to P and I (principal and interest) because the homes are not selling. Is this HMDA reportable?

Answer: Yes. You are converting construction loans to permanent financing. You will report them as a home purchase. From page D-6 of A Guide to HMDA Reporting: Getting It Right:


I know of a case where the completed spec was under contract and interest only was extended for sixty days to allow time for the sale. HMDA reportable?

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#905178 - 02/14/08 08:56 PM Re: construction to perm again complyorelse
Graham Priest Offline
Member
Joined: Jul 2004
Posts: 89
Lexington, Ky

The important thing is to develop your own procedures. There are serveral situations that occur in banking daily that are not addressed in the regulation. You have identified one. My suggestion is to develop your onw defination of temporary as temporary loan is not reportable for HMDA. Consider using temporary definiton of construction loans with a maturity of 24 months or less and bridge loans. The key is to have PROCEDURES. Good Luck

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#906042 - 02/15/08 09:16 PM Re: construction to perm again complyorelse
Mrs. Rizzo Offline
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Joined: Mar 2006
Posts: 10,392
Curled up by the fire...
Originally Posted By: cconrad
Dan, Is the trigger here that the construction period is over and that it is now P & I versus Interest Only?
Most construction to perm loans are all in one where the loan is set for so many months of interest only during the construction period then rolls into p&I payments after that period. Others will do one approval for the whole deal and have a change in terms done at the end of the interest only period to change the note to P&I...either way, I'd report either situation as a purchase. However, if the loan was for construction only with a mortgage take out, I don't report those. Those loans are temporary due to the primary source of repayment being long term financing.

Question: I work in commercial lending and we have several construction loans to builders that we are now having to extend the maturity date and modify the payments to P and I (principal and interest) because the homes are not selling. Is this HMDA reportable?
No. The loan was still for construction only....no permanent financing. Change in terms, extensions, renewals, etc. are not HMDA reportable.

Answer: Yes. You are converting construction loans to permanent financing. You will report them as a home purchase. From page D-6 of A Guide to HMDA Reporting: Getting It Right:


I know of a case where the completed spec was under contract and interest only was extended for sixty days to allow time for the sale. HMDA reportable?
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