I have a lender with a construction-only loan that matures shortly. Instead of making a new note for permanent financing to replace the construction-only loan; the lender wants to use an extension agreement and give the customer a final TIL.

Will that work? Does anyone else handle construction-only loans in this manner?

Thanks!

Our system will not produce a TIL in connection with a modification. If you're a HMDA reporter, you might have a problem as modifications are not reportable, but yet you have a "disguised" purchase money loan that will never show on your LAR.

To answer your question, no.....we would never modify a construction loan into a perm. However, we DO modify short-term home improvement lines of credit into perms as a standard practice. But all those short terms are reported on our LAR.