Construction Loan Purpose

I'm looking at a scenario where the bank did a short-term refinance of a initial construction loan as the house is still not complete and the loan matured. No new money was advanced. For the LE on the original construction, they showed Construction as the purpose. As the purpose on the "refinance" LE is listed as Refinance, the construction loan statement does not appear. Since the initial construction is not yet complete, should the purpose on the refinance LE be Construction or is Refinance correct and the construction loan statement is not needed? This was cited as an issue in an internal review.

Thank you.

"Refinance" is the correct purpose label because the second loan refinanced an existing obligation. Under 1026.37(a)(9), these labels are assigned using a hierarchical list, and the first list item the loan "fits" is the one used. Refinance is higher on the list than Construction.

Thank you John for confirming. So since the purpose is listed as Refinance, the construction loan statement would not be needed and the internal review should not have written that up, would that be correct?

Correct.

Thank you very much!