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#1561083 - 06/06/11 07:33 PM Construction Loan
Love Cruising Offline
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Joined: Mar 2009
Posts: 248
We have a customer that owns a piece of land and is asking for a contruction loan to build a primary residence. If the loan is for less than 2 years, will Reg. Z RESPA apply? we are not anticipating the permanent loan.

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Lending Compliance
#1561086 - 06/06/11 07:36 PM Re: Construction Loan Love Cruising
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Refer to §3500.5(b)(3). You say you are "not anticipating the permanent financing." Do you have a commitment from another lender? If not, you MAY be doing the permanent. Then RESPA does apply to the construction phase. If you do have a commitment for the perm financing, RESPA doesn't apply to your loan.

Reg Z applies to your loan, but whether you have to comply with §226.19(a) [a P-TIL disclosure and MDIA) depends on whether RESPA applies.
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David Dickinson
http://www.bankerscompliance.com

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#1609696 - 09/28/11 12:47 PM Re: Construction Loan David Dickinson
Love Cruising Offline
100 Club
Joined: Mar 2009
Posts: 248
Thanks. If we are doing a construction to permanent and at time of GFE the property insurance fee was not obtained, would that be considered a change in circumstances to reissue a new GFE?

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#1611054 - 09/30/11 02:04 PM Re: Construction Loan Love Cruising
MB Guy Offline
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Joined: May 2004
Posts: 10,124
Way, way south.
So, David, if we do a construction-only loan, with the perm financing portion of the loan undecided as the customer has stated they do not know where they want to get the perm financing, can we only do the RESPA disclosures for the construction phase initially, and then at the end of construction when the customer decides who they want to do the perm financing, do the RESPA disclosures for the perm portion if they decide to use us?
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