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#1686215 - 04/05/12 05:45 PM Construction Loan Inspection Fees
Mike Baker Offline
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Mike Baker
Joined: Dec 2002
Posts: 192
Tennessee
Example: For a construction permanent loan, an upfront fee of $400 is charged for up to 4 inspections during the construction phase. In other documentation it is disclosed to the borrower that if additional inspections are needed, there will be a charge of $100 per additional inspection.
If one or more additional inspections are necessary, does the additional charge to the borrower trigger a need for any
re-disclosures?

Thank you for your input.




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#1686227 - 04/05/12 06:10 PM Re: Construction Loan Inspection Fees Mike Baker
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,632
Galveston, TX
No, it would be considered a subsequent event.
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#1687235 - 04/10/12 01:41 PM Re: Construction Loan Inspection Fees Mike Baker
MarieF Offline
Junior Member
Joined: Nov 2011
Posts: 28
Texas
Randy - I have always relied on the "subsequent event" for inspection fees under Reg Z for construction only loans. However, I am concerned about tolerance violations if the loan is subject to RESPA. In the FAQ's under Section 4 & 5, question 14, it speaks about settlement charges collected after closing being subject to tolerance thresholds. Perhaps I am interpreting this incorrected. If subsequent events are protected can we also charge for the slab survey after settlement without a RESPA problem?

Would appreciate your feeback.

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#1687699 - 04/11/12 03:02 AM Re: Construction Loan Inspection Fees Mike Baker
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,632
Galveston, TX
Inspection fees are not settlement costs unless charged at loan closing.

Settlement service means any service provided in connection with a prospective or actual settlement, including, but not limited to, any one or more of the following:

(8) Rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents prior to transfer of title;

Since these inspection fees are after the transfer of title and are not required prospective to the actual settlement, they do not apply to the GFE or HUD-1.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1687725 - 04/11/12 12:16 PM Re: Construction Loan Inspection Fees Mike Baker
Mike Baker Offline
100 Club
Mike Baker
Joined: Dec 2002
Posts: 192
Tennessee
Randy, Thank you. The information which you provided has been very helpful.
_________________________
"When you believe He's all you need,that will be your defining moment." [from "Defining Moment" Newsong, Sheltering Tree CD]

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#1687772 - 04/11/12 02:07 PM Re: Construction Loan Inspection Fees Mike Baker
MarieF Offline
Junior Member
Joined: Nov 2011
Posts: 28
Texas
Randy, Thanks for the information. Would you mind addressing if the fees were charged at closing and addtional fees were needed after consummation? I understand Reg Z but am not sure how this would work with RESPA and tolerance violations.

Appreciate your assistance.

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