[mdunker]

Would a 6 month loan that is being used to make improvements to the property be subject to HPML guidelines?

[rcooper]

Under the HPML escrow requirement there is an exception for temporary financing:
A temporary or “bridge” loan with a loan term of twelve months or less, such as a loan to purchase a new dwelling where the consumer plans to sell a current dwelling within twelve months.

And under the HPML appraisal rules there is exception for:
A loan with maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer’s principal dwelling.

See 1026.35(b)(2)(c) and (c)(2)(v):
https://www.gpo.gov/fdsys/pkg/CFR-2016-title12-vol9/pdf/CFR-2016-title12-vol9-sec1026-35.pdf

[tressa]

Let’s say loan #1 the 6 month loan was to purchase the borrower’s primary residence and remodel and then the borrower makes loan #2 which is another temporary loan with additional money to finish the remodel.

Would loan #2 be exempt from the HPML appraisal rules?

[Author]

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