Here's the situation.....the lender would like to give this borrower a 3 year lot loan with a balloon, which would provide funds to begin constructing the residence at a slow pace (borrower owns the lot free and clear). When the loan closes, there is NOT a residence on the land, so a lien cannot be taken on a dwelling. However, we are not monitoring the progress of the dwelling, so they could obtain an occupancy permit and move in by maturity.
Should we consider ATR based on what the borrower intends to do with the proceeds? What if they change their mind and buy something else with the funds?