Commercial Construction

Borrower is a LLC that gets loans to build single family homes. Loan is then paid off when home is sold (these are not spec homes, they have purchasers). Security is the house being built (at time loan closes, its just a lot).

HMDA reportable in 2018?

No

Whew. That is what I thought but I was second guessing myself.

Thank you RR!

So, if the loan is a purchase of an empty lot, 12 months, and they state it is too build a residential dwelling, and will pay off when house sells.....this is not reportable???

I would have thought that it would be.

Spec construction is not reportable, correct.

So, all construction loans are non - reportable???

No that is not accurate. Refer to the commentary of REG C:

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.

2. Loan or line of credit to construct a dwelling for sale. A construction-only loan or line of credit is considered temporary financing and excluded under § 1003.3(c)(3) if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. See comment 3(c)(3)-1.ii through .iv for examples of the reporting requirement for construction loans that are not extended to a person exclusively to construct a dwelling for sale.

And I was just looking over some of the older post, and want too be sure I am correct with the new, "pecking order for HMDA"..

Am I correct in that it is now?
Purchase
Refinance
Refinance Cash Out
Home Improvements

Refi and cash out refi should really be 2. and 2a. since even if you need to report a cash out, it can't be both a cash out and a non-cash out. And don't forget that you now have an "other" at the bottom (for home equity loans).

We do not code them differently, all of our's in our JHA/OnBoard systems are coded refinances...so I guess most of ours will just be refinances (none will be refinance cash out). This is what I have been doing, but I just wanted too double check.

Thanks.

If you don't have to report anything as a cash out refi, then your hierarchy would basically be:

Purchase
Refinance
Home Improvement
Other