HMDA Reportable

Posted By: Somer

HMDA Reportable - 04/09/18 08:00 PM

I have a loan to provide partial funding of a construction project. A first collateral assignment of a first mortgage and security interest will be given from one LLC to another LLC and a security agreement will be on residential property. The underlying LLC will renovate and complete construction of the property into two condominium units , which will be sold upon completion.

Is this HMDA reportable as Home Improvement or is it considered temporary financing as a construction loan only.

The loan was not to purchase or refinance a dwelling.
Posted By: RR Joker

Re: HMDA Reportable - 04/09/18 08:06 PM

Honestly, it sounds like a purchase [title transfer] to me [purchase/rehab] to be sold [short term] and reportable.
Posted By: David Dickinson

Re: HMDA Reportable - 04/10/18 12:39 PM

I'm going to break down your comments and seek some clarity:

Quote:
I have a loan to provide partial funding of a construction project.
Partial funding is not a factor for HMDA.

Quote:
]A first collateral assignment of a first mortgage and security interest will be given from one LLC to another LLC and a security agreement will be on residential property.
The underlying LLC will renovate and complete construction of the property into two condominium units , which will be sold upon completion.

Was there a title transfer? IOW, did the second LLC purchase the property from the first LLC? If so, this is a "purchase" for HMDA, as Joker stated.

This is the section of the regulation that will help you understand this position:
Lender A originates a loan with a nine- month term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. …the loan is not designed to be replaced by permanent financing and therefore the temporary financing exclusion does not apply. Such a transaction is not temporary financing (not reportable)… merely because its term is short. [Commentary to §1003.3(c)(3) #1(v)]