I think I know the answer to this but I want to see what everybody else thinks. Scenario is you have a construction loan to build a 1-4 family home. Would the Homeownership Counseling Disclosure be required.

Non-Transfer of Land- I say No since RESPA does not apply.
Transfer of Land- I say Yes since RESPA does apply.
Construction to Perm- I say yes since RESPA does apply.

Am I correct in my thinking and reading of the regulation and how would you handle your construction loans that RESPA does not apply to. Thank you!

MMontjoy01,

Have you had this confirmed by anyone? It sounds right to me but I would love to have someone weigh in. We do a lot of construction loans.

Thanks!

Azbanker,

I have yet to have this confirmed by anybody yet. I am with you on how I am reading it but I would love to have someone to weigh in too. We also do alot of constrution loans. Suprised one of the Guru's has not given an opinion.

If the loan is subject to RESPA, the list has to be provided.

If it's a contruction loan on land currently owned by applicant, with takeout commitment from a different lender, no RESPA, no list.

If it's a construction loan on land to be acquired by the first user using funds from the loan, RESPA applies, provide the list.

If it's a construction/permanent or a construction that may be converted to permanent financing by the same lender, RESPA applies, send the list.

If it's a long term construction loan (over 24 months) to other than a bona fide builder, regardless of who might provide permanent financing, RESPA applies, send the list.

It's all about 1024.5(b)(3).

With TRID, construction only loans (where borrower already owns the land), with a term of 12-months would otherwise not be subject to RESPA. So, even though now subject to TRID, it would still be exempt from providing the Homeowners Counseling Notice. Is that right?

Yes, as long as you had a take-out commitment for the permanent loan from another lender.