Can anyone tell me what the exact meaning of a temporary loan? We recently got "dinged" for have temporary loans on our LAR. However, I can not find anything that says exactly what a temporary loan is...
Would a six month interest only loan be "temporary"? I say yes, but I'm getting some resistance...

Is the 6 month interest only loan designed to be replaced by financing of a much longer term? Or is the intent that the customer will just pay the loan off after 6 months? If the former, then temp. financing. If the latter, then not. I'm no expert on temporary financing either, but from what i've learned on BOL, i think it comes down to the "designed to be replaced by financing of a much longer term" for the most part.

Temporary financing really has very little to do with the term of the note or the structure of the payments. It is a "gap" loan that is intended to get you from now to permanent financing. If you do not have a plan for permanent financing, then this loan can not be treated as temp, and you must report for HMDA. See this article, in fact, keep a copy of it and be prepared to quote to any and everyone.

http://www.bankerscompliance.com/assets/files/articles/HMDA%20and%20Temporary%20Financing.pdf

The caveat here is that if a loan is on scheduled monthly payments that include principal and interest it would be very difficult to consider it temporary financing.