we have a construction loan that is maturing, at construction phase of loan we provide GFE's for both construction phase and permanent phase. We are now getting ready to do permanent closing however officer wants to change term from a 5 year balloon to a 3 year balloon, interest rate is the same the loan payment is also going down can we do this? can we reissue a GFE or are we bound to the terms on the GFE that was provided at time of construction phase?

thank you.

anyone?

First off, FAQ p21 states:
1) Q: If a transaction involves new construction in which the loan may not close for months, how does this affect the issuance of a GFE?
A: In transactions involving new home purchases, where settlement is anticipated to occur more than 60 calendar days from the time a GFE is provided, the loan originator may provide the GFE to the borrower with a clear and conspicuous disclosure stating that at any time up until 60 calendar days prior to closing, the loan originator may issue a revised GFE. If no such separate disclosure is provided, the loan originator may not issue a revised GFE in the absence of changed circumstances or another event as provided in 24 CFR § 3500.7(f).


If you haven't locked the rate yet, you must redisclose and can capture any costs that change as a result of the rate lock.

Otherwise, if no costs are changing, I'm at a loss as to why you'd want to redisclose.

so if we decide to reissue GFE (provided 60 day Disclosure) would we need a new application for permanent.

i would think the application what was accepted for construction permanent would cover both am i correct?

and thanks for your help

We have 2 applications if the perm is going secondary market (new Note and DOT). If the perm is only a modification and staying inhouse then we only have 1 application.

My question is...although you got the 60 day letter...it sounds like the LO is ready to close the perm loan with different terms...are you going to delay it 60 days in order to affect your 60-day letter?

no perm loan does come due until july so we are going to just provide GFE at this point.

I'm with Truff. If no costs are changing, you wouldn't want to redisclose the GFE. The term is allowed to be different. Your TIL APR, however probably needs to be revisited.

agree so would i rediclose only the preliminary TIL for permanent phase?

and of course disclose the final at closing.