(a) Purchase or refinanceConstruction Conversion Mortgages and Renovation Mortgages may be for purchase transactions, "no cash-out" or cash-out refinance transactions as shown in the chart below. A Construction Conversion Mortgage or a Renovation Mortgage may not be used for the purpose of making a single disbursement of funds to a builder or contractor or for the assumption of an existing Mortgage.
| If, prior to the closing of the Interim Construction Financing, the Borrower is... | Then the transaction is a... | And proceeds from the Interim Construction Financing may be used to... |
| Not the owner of record of the land, or If the site-built home is on a leasehold estate, not the lessee of the leasehold estate | Purchase transaction |
|
| The owner of record of the land, or If the site-built home is on a leasehold estate, the lessee of the leasehold estate | Refinance transaction |
|
(b) Special considerations for Refinance MortgagesThe following special considerations apply to Construction Conversion Mortgages and Renovation Mortgages that are refinance Mortgages:
| Type of refinance | Eligible property types | Land ownership requirements |
| "No cash-out" refinance as described in Section 4301.4 | Site-built homes | No additional requirements |
| Manufactured Homes | At least one Borrower must have been on title to the land for 12 months or more prior to the Effective Date of Permanent Financing | |
| Cash-out refinance as described in Section 4301.5 | Site-built home | At least one Borrower must have been on title to the land for six months or more prior to the Effective Date of Permanent Financing |
Special purpose cash-out refinance Mortgages are ineligible as Construction Conversion Mortgages and Renovation Mortgages.Construction Conversion and Renovation Mortgages are "no cash-out" refinance transactions if the requirements in Section 4301.4 are met. For purposes of Section 4301.4, the amount of the Interim Construction Financing secured by the Mortgaged Premises is considered an amount used to pay off the first Mortgage as described in Section 4301.4. The proceeds of the Permanent Financing may be used to pay off a junior lien(s) secured by the Mortgaged Premises provided the lien(s) were used in their entirety for the construction and/or renovation of the subject property, as applicable, as documented in the Mortgage file. However, paying off unsecured liens or construction costs paid by the Borrower outside of the secured Interim Construction Financing is considered cash out to the Borrower, if above $2,000 or 2% of the loan amount, whichever is less.
Additional Resource: https://www.allregs.com/tpl/Viewform.aspx?formid=00051759&formtype=agency#page=208