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Exemption under ATR?

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  • March 16, 2018 at 5:02 pm EDT #12674
    tressa
    Participant

    Would a loan to purchase and remodel a dwelling secured with the dwelling – 12 month term – interest only, setup as a construction line of credit qualify as an exemption (temporary financing) under the Ability to Repay Rules? The loan will be replaced with permanent financing at maturity.

    March 19, 2018 at 10:22 pm EDT #12685
    rcooper
    Member

    Yes, based on what you’ve described – a 12 month loan that will be replaced by permanent financing when the initial 12 month loan expires – it seems to be a temporary loan and would be exempt (per 1026.43(a)(3)(ii)) from the ATR requirements of 1026.43(c)-(f).

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