---
title: "HMDA: Temporary Financing Exclusions"
description: Learn about HMDA's exclusions for temporary financing, including what qualifies as temporary financing and when it is not reportable. Understand the key distinctions to ensure accurate HMDA reporting. HMDA Guidance.
---

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# [HMDA: Temporary Financing Exclusions](https://blog.bankerscompliance.com/en/hmda-temporary-financing-exclusions)

 Written by [David Dickinson](https://blog.bankerscompliance.com/en/author/david-dickinson) | Feb 20, 2024 3:09:52 PM

The HMDA requirements state that institutions should NOT report loans or lines for temporary financing. While that might seem pretty straightforward, we find there is often a lot of confusion surrounding this exclusion. So, what is temporary financing? The Commentary to [§1003.3](https://www.consumerfinance.gov/rules-policy/regulations/1003/3/)(c)(3) #1 states a loan or line of credit is considered temporary financing *… if the loan or line of credit is **designed to be replaced by separate permanent financing extended by any financial institution to the same borrower at a later time.* This could include things like bridge/swing loans or loans for the initial construction of a dwelling. For example, say you make a 12-month loan to construct a dwelling. Once the construction is complete, it will be paid off and replaced with permanent financing (i.e., two-phase financing). In this case, the initial 12-month loan is considered temporary financing and is not HMDA reportable. The permanent loan; however, is HMDA reportable as a Purchase.

The key thing to remember is that the temporary financing designation is driven by having two phases and not simply because a loan/line has a short term. For example, a construction-only loan/line that won’t be replaced with permanent financing IS reportable for [HMDA](https://www.consumerfinance.gov/data-research/hmda/). There is one exception to this rule; however, for builder loans as the Commentary to[ §1003.3](https://www.consumerfinance.gov/rules-policy/regulations/1003/3/)(c)(3) #2 states, *a construction-only loan or line of credit is considered temporary financing and excluded… if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale.*

David explains more in the video.

Published  
2024/02/20

 

[View full post](https://blog.bankerscompliance.com/en/hmda-temporary-financing-exclusions)

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