Good morning

Builder purchased the lot, built the home, went to contract within six months of lot purchase. A second appraisal is required because this is considered a flip due to the wording in the regulation which refers to "property". However, the CFPB Small Entity Guide - TILA HPML Appraisal Rule- (page 19) Defines a flip as purchasing a "home"- Why would a second appraisal be required when the purchase was for a vacant lot and sale with a newly constructed home?
From the Guide- " What is a “flip”? (15 U.S.C. § 1639h(b)(2); § 1026.35(c)(4)(i))
Additional requirements apply in certain cases when a covered HPML is being used to purchase a home that
is being resold within 90-180 days of its acquisition by the seller. These types of transactions may be
commonly described as “flips.”
If the consumer is using a covered HPML to buy a flipped property, unless exemptions apply (see “What are
the exemptions from the requirement to obtain an additional appraisal for certain flipped homes?” on page 25

Seems the CFPB is providing guidance that this applies to flipped homes, not vacant land.

You would have to determine the acquisition date by the builder and the date of the contract to purchase to determine whether or not the property is being flipped in 90 days or fewer or 90 to 180 days. Then you would determine the builder's acquisition price. That would be the cost of the property at the time of sale and the cost of construction to determine the allowable 10% or 20% increase in the cost. There is really no exemption for spec homes.

Got it, thank you!