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Loan w/ Temporary Financing & LE for Permanent

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Question: 
The bank provided a construction loan to a borrower to build a dwelling. Along with the temporary financing the bank also provided a loan estimate for a permanent loan. This was done to make sure the borrower had all the pertinent information to make a decision about the new construction as well as due diligence by the bank to be certain the borrower will qualify for the end mortgage. Is it considered a HMDA reportable transaction as a withdrawn application if the bank provided the loan estimate for permanent financing? The construction loan was taken out by a permanent mortgage in the secondary market loan and not the in-house mortgage that the loan estimate referred to.
Answer: 

It sounds like you had a request for both construction and permanent financing. You originated the construction loan (exempt from HMDA because it's temporary financing) and provide a LE for the permanent financing. You say "The construction loan was taken out by a permanent mortgage in the secondary market loan . . ." This permanent loan is HMDA reportable either by your institution or by the investor - depending on who made the credit decision.

I understand the in-house loan was replaced by the 2nd market loan. I don't see this as a withdrawal but rather a different way to fund the applicant's request. I wouldn't report this separately as the 2nd market loan is being reported.

First published on 06/23/2019

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