HMDA Definition of A Bridge Loan

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Question:

Regarding HMDA, we have two different answers as to what defines a Bridge loan. They are basically the same answers with one exception: if the loan is secured by BOTH dwellings (existing one and one to be purchased); OR if the loan is secured by ONE dwelling (either existing or one to be purchased). As I said, I understand consistency is the key to remaining violation free in this area, but again, I would like to know how the majority views this detail of a Bridge loan.

Answer:

A rose is a rose...

Reg C, HMDA, doesn't define a bridge loan. It uses that term to define "temporary financing." Essentially a bridge loan is one loan in a series of loans that will result in longer term financing. Hence, HMDA's use of the term to define a temporary loan.

I have heard of bridge loans that meet the definition above being secured by either one, or both, of the properties. The security doesn't define the purpose, in this case.

First published on BankersOnline.com 7/01/13