Booked as Construction, But Funds for Purchase

Posted By: manimal

Booked as Construction, But Funds for Purchase - 05/10/13 03:23 PM

I scoured the HMDA threads as best as I could, so I don't think this particular question has been asked.

We have a loan to aquire multiple townhomes and finish constructing two of them. The loan was booked as a construction loan, but 75% of the funds are being used for the acquisitions.

Does the percentage of funds being used towards the purchase make this a HMDA reportable loan, even though the loan was booked as a (3-yr) construction loan? There are no plans for permanent financing, the owner plans to sell the townhomes.

Thanks in advance for your thoughts. smile
Posted By: RR Joker

Re: Booked as Construction, But Funds for Purchase - 05/10/13 03:30 PM

If it's truly to complete the intial construction, I think it actually would still be a CL at this point. However, due to the term being so long {and no take out expected}, I believe I would handle it as a purchase. Interesting sitch!

Posted By: #Just Jay

Re: Booked as Construction, But Funds for Purchase - 05/10/13 04:48 PM

Agreed.
Posted By: manimal

Re: Booked as Construction, But Funds for Purchase - 05/10/13 04:49 PM

UGH. Guess it's time to revamp my reports in case more of these happen in the future. I wasn't even pulling construction loan codes prior to this.

Stupid commercial loans and their 'creative financing'. mad
Posted By: #Just Jay

Re: Booked as Construction, But Funds for Purchase - 05/10/13 05:25 PM

Word.