I am struggling to find in the regulation where we would be in violation if we were to report that a property will be occupied as the borrower's primary residence upon the completion of construction. If a borrower can have only one principal residence, and we learn that the occupancy will in fact not be a second home, aren't we required to report what we know it to be according tot he definition? That's how I read Comment 4(a)(6)-2 below.
".....if an applicant or borrower buys or builds a new dwelling that will become the applicant's or borrower's principal residence within a year or upon the completion of construction, the new dwelling is considered the principal residence for purposes of applying this definition to a particular transaction."
Comment 4(a)(6)-2:
2. Principal residence. Section 1003.4(a)(6) requires a financial institution to identify whether the property to which the covered loan or application relates is or will be used as a residence that the applicant or borrower physically occupies and uses, or will occupy and use, as his or her principal residence. For purposes of § 1003.4(a)(6), an applicant or borrower can have only one principal residence at a time. Thus, a vacation or other second home would not be a principal residence. However, if an applicant or borrower buys or builds a new dwelling that will become the applicant's or borrower's principal residence within a year or upon the completion of construction, the new dwelling is considered the principal residence for purposes of applying this definition to a particular transaction.