Posted By: Dan Persfull
HMDA Constuction/Permanent - 08/29/02 10:01 PM
Need some help.
What is your definition of a construction permanent loan?
1. Construction loan with a commitment to make the permanent loan. (2 separate closings.)
a. Construction loan for X months.
b. Construction loan rolled into permanent financing.
2. Construction phase and permanent phase done in one closing.
At the present time our “construction permanent loans” are done under #1. Therefore, I contend that our “construction phase” is temporary financing and we do not need to report it on our LAR until we actually did the permanent financing. My reasoning is that the borrower could get more favorable terms else where during the construction phase, therefore taking their permanent financing there.
However, my superior feels we should be reporting the loan, as a purchase, once we close the construction phase. His reasoning is that we know we are going to do the permanent financing at the offset.
Here’s how I think it should be:
· The construction phase is not reportable (temporary financing to be liquidated from another re-payment source - in this case another loan commitment and I contend that our commitment to do the permanent financing is no different than if we had a commitment from another institution to take out the construction loan.)
· Permanent loan would be reported as a purchase when the permanent financing is consummated.
· If the permanent loan does not close, due to borrower going else where, we would report it as “approved not accepted”, unless the borrower specifically withdrew the loan request, then we would report it as “withdrawn”.
Refer to HMDA Reporting GIR Appendix D #5 page D-7.
I contacted HMDA Help and they referred me to the above without giving me an answer. I feel it supports my position.
Your thoughts and insight would be appreciated.
Thanks,
Dan
What is your definition of a construction permanent loan?
1. Construction loan with a commitment to make the permanent loan. (2 separate closings.)
a. Construction loan for X months.
b. Construction loan rolled into permanent financing.
2. Construction phase and permanent phase done in one closing.
At the present time our “construction permanent loans” are done under #1. Therefore, I contend that our “construction phase” is temporary financing and we do not need to report it on our LAR until we actually did the permanent financing. My reasoning is that the borrower could get more favorable terms else where during the construction phase, therefore taking their permanent financing there.
However, my superior feels we should be reporting the loan, as a purchase, once we close the construction phase. His reasoning is that we know we are going to do the permanent financing at the offset.
Here’s how I think it should be:
· The construction phase is not reportable (temporary financing to be liquidated from another re-payment source - in this case another loan commitment and I contend that our commitment to do the permanent financing is no different than if we had a commitment from another institution to take out the construction loan.)
· Permanent loan would be reported as a purchase when the permanent financing is consummated.
· If the permanent loan does not close, due to borrower going else where, we would report it as “approved not accepted”, unless the borrower specifically withdrew the loan request, then we would report it as “withdrawn”.
Refer to HMDA Reporting GIR Appendix D #5 page D-7.
I contacted HMDA Help and they referred me to the above without giving me an answer. I feel it supports my position.
Your thoughts and insight would be appreciated.
Thanks,
Dan