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CFPB Update On Construction Loans (Perm Financing)

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We are being told that the CFPB has given an update on construction loans at the time of perm financing. We are understanding it to read that if you do the modification into perm financing (no new loan) it is not HMDA reportable. Does this mean a construction loan would never to reported if this is the case?

When the FRB oversaw HMDA, they issued a FAQ (2011) that indicated you should report a loan that is being modified from a construction phase into permanent financing. The CFPB rewrote HMDA and the new rules do not contain this requirement. Instead, the new HMDA rules clearly state to not report modifications. Therefore, the loan you describe would never be reported.

Now, if you knew you were going to do this, there's an argument that should be reporting it as it really isn't a temporary loan followed by a permanent loan. If this is the exception to the rule, then I stand by not reporting it.

First published on 02/17/2019

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