We are considering offering a Fannie Mae one-time close construction permanent loan. I'm hoping those of you who offer the product could share some insight on what has worked best for you. Especially in regards to what options you offer at conversion to permanent. If you can share an example of any addendum or agreement that you have, that would be great. Thanks for any and all advice.

Especially in regards to what options you offer at conversion to permanent.

I'm confused. If this is a one time close - what options would there be at conversion. Everything typically is covered in the original contract at closing.

Oh, options like the ability to convert from an adjustable rate to a fixed rate or for the rate to flow down at the time it modifies from construction to permanent. We were thinking interest only during the construction phase.

My point is that on a one time close, there is no "modification" at the time of conversion from the construction phase to the permanent. All terms for the construction and permanent phases of the loan are set within the loan agreement - otherwise, how could you possibly disclose the loan at the time of consummation for TIL and RESPA disclosures? If you want to build in those types of options into the note, then you probably need to be visiting with legal counsel for guidance.

Yes, you see my dilemma and why I'm asking for advice. They want the ability to set the rate at closing for the construction phase and offer other options for the permanent phase. I can't for the life of me figure out how we would disclose it properly.

What they are talking about is definitely not a "one-time" close loan.