CFPB HMDA FAQ Const 1 - The proceeds of the loan will be used to buy a house, demolish it, and rebuild a house for sale immediately after closing. Is this transaction excluded from HMDA reporting?

Compliance > Regulation C - HMDA > CFPB
Q:   My financial institution originated a loan to a builder to construct a dwelling for sale. The proceeds of the loan will be used to buy a house, demolish it, and rebuild a house for sale immediately after closing. Is this transaction excluded from HMDA reporting?
 
A:   No. In the scenario described, part of the loan will be used for purchasing a dwelling in addition to constructing a dwelling for sale.  Therefore, the transaction described above is not excluded from HMDA and should be reported as a home purchase loan.  A construction-only loan or line of credit is considered temporary financing and excluded from collection and reporting requirements under comment 3(c)(3)-2 if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale. Comment 3(c)(3)-2 to Regulation C, 12 CFR § 1003.3(c)(3).  
 
 
This Q&A was based on information contained in the Consumer Financial Protection Bureau’s HMDA FAQs Compliance Aid, which may be updated from time to time.  This HMDA-related issuance may be found here: 
 
 

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