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#1978554 - 11/24/14 04:50 PM Disclosures Construction to Permanent Loan
Compliance Audit Offline
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We are making a loan to construct a primary residence - we would like to make it a one note - loan, the construction phase for one year at 6% and then a modification for the takeout for 25 years at a variable rate.

I know we can use 2 TILs - one for each payment stream but how would be prepare the GFE - can we do 2 for one loan?

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#1978570 - 11/24/14 05:13 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
rlcarey Online
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rlcarey
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Galveston, TX
If it is one loan, there is only one closing - so there will be one GFE and one HUD-1.

PS. There is no "modification" for the takeout. The construction loan and permanent loan is contained in a combined note signed at closing.
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#1979530 - 11/26/14 07:52 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Bec Offline
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I need help with a single phase construction to permanent. As far as the PTIL it appears that in the regualtion you shall disclose the repayment schedule without reflecting the number or amounts of payments of interest only that are made during the construction phase etc etc....but what about the GFE? How do you disclose the "Summary of Loan" on the first page? Would you just put down the Interest only portion of the loan and then indicate that the interest and payments can rise?

Thank you!
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#1980006 - 12/01/14 07:02 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Antilles Offline
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I ahve a question similar to this. We have an investor that has a one time close construction permanent program that states our institution makes the construction (including handling disbursements)and the investor makes the permanent loan. Upon completion of the construction the loan is modified into a permanent financing. The note signed at closing has our institution name as the lender. How would this meet section 1026.17 (c)'s definition of "may be permanently financed by the same lender?
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#1980149 - 12/02/14 12:43 AM Re: Disclosures Construction to Permanent Loan Compliance Audit
rlcarey Online
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Galveston, TX
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#1980426 - 12/02/14 09:28 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Bec Offline
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Thank you for the thread but I don't see where it gives guidance on how to fill out the summary of loan information on the GFE.
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#1980432 - 12/02/14 09:43 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
rlcarey Online
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rlcarey
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Galveston, TX
It doesn't for the GFE as HUD in its stupidity didn't think to address anything other than a 30 year standard mortgage product. You just make a decision on how you want to handle it and go with it. I have not seen a regulator make a stink over it one way or the other.

For the TIL disclosures - refer to the commentary to Appendix D:

On the other hand, if the creditor elects to disclose the construction and permanent phases as a single transaction, the construction phase must be disclosed pursuant to Appendix D, Part II.C, which provides that the creditor shall disclose the repayment schedule without reflecting the number or amounts of payments of interest only that are made during the construction phase. Appendix D also provides, however, that creditors must disclose (outside of the table) the fact that interest payments must be made and the timing of such payments. The rate and payment summary table disclosed under §1026.18(s) must reflect only the permanent phase of the transaction. Therefore, in determining the rates and payments that must be disclosed in the columns of the table, creditors should apply the requirements of §1026.18(s) to the permanent phase only. For example, under §1026.18(s)(2)(i)(A) or §1026.18(s)(2)(i)(B)( 1 ), as applicable, the creditor should disclose the interest rate corresponding to the first installment due under the permanent phase and not any rate applicable during the construction phase.
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#1980434 - 12/02/14 09:47 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Bec Offline
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rlcarey, thank you very much. I was referring to Appendix D in guiding my loan officer with their docs but somehow missed the "creditors must disclose (outside of the table) the fact that interest payments must be made and the timing of such payments" Do you know if this must be done on the TIL itself or can it be a separate document and is that on the final TIL or does it have to be disclosed with the ETIL as well?
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#1980455 - 12/02/14 10:40 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
rlcarey Online
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rlcarey
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Galveston, TX
It would be part of the segregated disclosures and would be required on both the early and the final TIL.
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#1980853 - 12/03/14 10:52 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Bec Offline
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Bec
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On the ETIL this language is on the disclosure itself:
"Interest Payments During Construction Phase. Interest on the amount of credit outstanidng during the period in which credit advances are made will be payable monthly."

Would that satisfy that requirements?
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#1980855 - 12/03/14 11:00 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
rlcarey Online
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rlcarey
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Galveston, TX
You happen to be using ARTA? If you are, their disclosures are correct.
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#1982068 - 12/10/14 02:25 PM Re: Disclosures Construction to Permanent Loan Compliance Audit
Antilles Offline
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Southern US
No we are using Doc Magic.
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