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#1931167 - 06/10/14 07:08 PM Homeownership Counseling Disclosure on Constructio
MMontjoy01 Offline
Junior Member
MMontjoy01
Joined: Apr 2008
Posts: 47
NC, USA
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!

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HOEPA and Homeowner Counseling Rule
#1937151 - 07/01/14 11:55 PM Re: Homeownership Counseling Disclosure on Constructio MMontjoy01
azbanker Offline
Member
Joined: Apr 2008
Posts: 55
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!

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#1939964 - 07/11/14 06:11 PM Re: Homeownership Counseling Disclosure on Constructio MMontjoy01
MMontjoy01 Offline
Junior Member
MMontjoy01
Joined: Apr 2008
Posts: 47
NC, USA
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.

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#1940076 - 07/11/14 07:36 PM Re: Homeownership Counseling Disclosure on Constructio MMontjoy01
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
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).
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John S. Burnett
BankersOnline.com
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#2044312 - 10/14/15 11:42 PM Re: Homeownership Counseling Disclosure on Constructio MMontjoy01
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,271
California
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?

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#2044320 - 10/15/15 11:20 AM Re: Homeownership Counseling Disclosure on Constructio MMontjoy01
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
Yes, as long as you had a take-out commitment for the permanent loan from another lender.
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