Is anyone having issues with construction only loans that include the purchase of the lot and their loan processing program? We seem to be hitting a snag with ours. These type of loans are not currently supported by our processing program. Which means, we do not have a Purchase Price tag on page 1 (which we must have when purchasing the property) and we do not have the calculating cash to close table when there is a seller on page 2 (which we must have when there is a sale). We were told to hand write the disclosures. Is anyone having this issue also? and if you are, how are you going about it?

I think just about everyone you speak with is having this issue. I know for a fact that Compliance One Mortgage and Encompass will not properly handle these transactions unless you do 2 separate transactions, 1 for the purchase and another one for the construction.

As for as I'm concerned the software companies completely failed on this, as did the CFPB for their lack of guidance.

Thank you Dan. Yes, we were told to do 2 separate transactions. one for the purchase and one for the construction. Or, to do the purchase/construction disclosure by hand. But if there is no guidance on these type of loans, I cannot see how if we completed by hand, the disclosure would be any more accurate.

Along this same train of thought, I've heard the provisions under 1026.19(e)(3)(iv)(F) described as 'get out of jail free cards' for these types of loans.

If the provision gives creditors as much latitude for re-disclosing these loans as I've heard described, it would be a boon given all this software, regulator, and pundit confusion.

Have you looked into it?

19(e)(3)(iv)(F) Delayed Settlement Date on a Construction Loan. We understood we could not use this because our loans are just construction only and not two/phase loans that we keep.

Where did you all find this distinction?

We are having the same problem with Laser Pro. We contacted the CFPB about how they wanted construction loans with lot purchase disclosed. This was the answer: • On the estimate, he said to list the “Funds Held Back for Construction” under H – Other as a positive number. On the Cash to Close Section it will be listed as Closing Cost Financed as a negative number and the 2 figures will wash. I questioned it being included in the closing cost total when it was not actually a closing cost and he said that it was actually the construction “cost” so it was a cost to the customer. • On the closing disclosure he said it will be listed the same way and therefore will be no variance from estimate to closing. • I also questioned the deposit on a purchase not showing up on the closing disclosure under the Summaries of Transactions / Seller’s Transaction’s side and he said this was correct because the sale price is listed and the customer is ultimately getting that amount, whether paid before or at closing. Well Laser Pro does not allow it to be done this way. :-(

I'm sorry to say that the CFPB response sound like someone pulled it out of the air -- or worse. I believe the plain and simple is that the Bureau didn't figure out how to reflect the hold-back on construction loans.

If our Loan Processing System cannot get those type of loans to work because of lack of guidance, how can other processing system claim their systems can do it?