How will construction only loans where the borrower intends to sell the home upon completion be reported for HMDA under the new rule starting next year?
There has been some debate on this, and the rule as written isn't very clear on how you should report, or whether you should report at all. However, the CFPB just issued a proposed rule that addresses this question: loans for the initial construction of a home that will be sold upon completion will be considered temporary loans, and therefore not reportable.
However, the proposed rule also makes clear that "flip" transactions WILL be reportable as a purchase. Those are transactions in which a borrower purchase an existing home, renovates it, then sells it after completing the renovation.
Note that this is a proposed rule, so watch for the final rule to be published in the next few months.
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