On a construction perm 1x close that will require escrow when modified to permanent financing, we have the GFE marked "yes we have an escrow account" on page 1 under escrow information? There is nothing put in the fields on page 2 of the GFE for "initial deposit for your escrow account".

When the loan modifies to permanent P&I payments, we will have a 2nd HUD completed that shows the Escrow reserves and escrow information as well as an initial escrow disclosure.

Does this sound like we are following correct procedures on the way we have the GFE disclosed?

bump please

I am confused. If this is a one time close, how can their be two HUD-1s??

I live in a state of confusion with these...I'm about to give up to be honest!

We have one HUD at closing when the building starts and they are set up to start making interest payments...it has all the charges with the exception of Interest & Escrow. The 2nd HUD is done at Modification which is when it goes into the permanent financing. On that 2nd HUD, they charge Interest and Escrow/Reserves if applicable. I have been told that they can't charge those 2 particular items (Interest & Escrow) on the original HUD but it has to be charged when the loan modifies to permanent financing.

Thank you Randy for any advice you could give.

If you are modifying the loan, then it is not a one time close. A one time close is one contract that addresses both the construction and the permanent phases of the loan. There are no modifications necessary. I have to ask, what are you modifying??

Unless the modification rises to the level of a refinance under 1026.20, you don't have any additional disclosure requirements when you modify a loan.

You might need to sit down with your legal counsel and discuss this process. If someone says "we have been doing it this way forever" they probably really mean it - like 30 years or more.