I realize there are similar threads on temporary financing, home improvement, etc. but many of them cover property being razed, etc. I'm hoping for some direction/confirmation...

We have a handful of dwelling secured loans that we end up doing a construction loan for as the improvements are substantial. There IS intended to be an end loan replacing the construction loan. I understand that we can only 'construct' a dwelling once, but does this still qualify under the temporary financing exemption as it is designed to be replaced? or home improvement?

Any loan that meets the below definition would qualify for the temporary financing exemption.

Official Interpretation
Paragraph 3(c)(3)
1. Temporary financing. Section 1003.3(c)(3) provides that closed-end mortgage loans or open-end lines of credit obtained for temporary financing are excluded transactions. A loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time. For example:

Thanks so much Dan. Appreciate that extra validation, sometimes I think we can muddy our own waters

In the event that we have one of these and it doesn't end up getting replaced by the intended permanent financing and is instead refinanced by another one of these temporary loans, should the initial loan then be reported? or is it still exempt because it was 'designed' to be replaced?
seems like a messy description after I re-read: 'temp' Loan A was replaced by temp Loan B as costs were significantly higher; so Loan A not replaced by Perm. Financing...

A temporary loan refinanced by another temporary loan does not lose its exemption.

However a continuous loop of refinancing a temporary loan with another temporary loan could raise the the examiner's suspicion you are doing so to circumvent the HMDA reporting requirements.

And Section 35 and 43, etc.

And Section 35 and 43, etc.

Thanks for the insights- this replacement scenario has only occurred in the one scenario so I don't think think we've got an intentional circumvention issue. Will certainly look out for that though.