Notice: Function _load_textdomain_just_in_time was called incorrectly. Translation loading for the wp-migrate-db domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /srv/app/gotoiba-dev/htdocs/web/wp-includes/functions.php on line 6121
Are bridge loans that the borrower does not intend to convert into permanent financing subject to RESPA or HMDA? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Are bridge loans that the borrower does not intend to convert into permanent financing subject to RESPA or HMDA?

—

by

Both the RESPA and HMDA regulations exempt “temporary financing” (“such as bridge or construction loans” or “such as a construction loan,” respectively). 24 CFR 3500.5(b)(3) (RESPA); 12 CFR 1003.4(d)(3) (HMDA). But, if a short-term loan is not designed to “bridge” a borrower to a longer-term, permanent loan, it is not considered temporary financing. As explained in the FFIEC’s HMDA FAQs (Temporary Financing): 

[F]inancing is temporary if it is designed to be replaced by permanent financing of a much longer term. A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan.