How would we disclose one-time close construction loans. Is there two sets of Loan Estimate and Closing Disclosure; one for contruction period and one for the permanent phase?

That would be my best guess...just like it is today.

We don't do two sets today (of the GFE and HUD) for a one time close construction loan. I don't understand why we need to under the new rules. What am I missing?

I mis-read the original poster. We don't do construction -perm loans here, so I digress to someone else's opinion!

All of ours are two-phase.

I am trying to determine how the integrated disclosures would work with one-time close construction permanenet loans now that temporary construction loans fall under the integrated disclosures. I believe it is one set of disclosures for the permanent phase but I want to make sure since our mortgage area tends to have problems disclosing them now.

My thought is that it would be one set of disclosures, as the current one time close is now. The main difficulty is going to be how to disclose the construction loan and the perm loan. As is, your disclosures mostly captured the perm loan, with the TIL including a blurb about when the consturction period/interest only period ended and the GFE reflecting the construction interest rate while the TIl reflected the perm rate. With one document, it will have to accomodate your construction loan disclosures and perm loan.

I guess I am a little confused. In the scenario that you put forth, the new integrated disclosure rules do not impact the need to make any new disclosures. Basically, nothing has changed. You can either disclose them as separate transactions or as a combined transaction.

For a construction to perm all in one loan, one time close you would issue a Loan Estimate and a Closing Disclosure that would include both phases of the transaction. For example, in the Projected Payments section on page one you would likely have a column with the heading "Year 1" for the construction phase that relates to interest only payments and a subsequent column with the heading "Years 2-30" that represents the P&I payments relative to permanent phase of the transaction.

Any thoughts on this scenario? At our institution, one lending unit would do the Construction loan, and another unit would do the perm (and sell it on the secondary market). They are 2 separate closings, and we disclose them as such. Apart from some internal coordination, am I missing something obvious, like having to issue them simultaneously before construction? I don't think we were planning on such a requirement.

You would issue two LEs at the time of application, one for the construction loan and one for the permanent loan. The LE for the permanent loan would have to comply with 19(e)(3)(iv)(F)

In short, yes. You have one app for two loans. The consumer says I want to build a home. You tell them you'll do it in two phases. That's one application for two loans. You must simultaneously provide 2 sets of disclosures. One for the const. and one for the perm loan. You'll include the 60-day new const. disclaimer on page #3 of the LE for the perm loan. This will allow you to provide a revised LE for the perm loan when you are 60 days out from closing.

I would like to bring up this topic again. Actually two-phase construction loans. If we have an application for a construction loan but do not know at the time whether we will do permanent financing (but may), should two sets of disclosures still be provided?

We don’t do construction-perm loans. I have a question for others that don’t do construction-perm loans. I was testing disclosures for a construction loan on our LO system. In the Projected Payment’s first column it has a minimum and maximum amount with the words “only interest”. I can’t figure out why there would be min and max amounts. The interest rate is fixed for the duration of the construction loan (9 months). I was calculating the monthly interest payment according to the first part of Appendix D to Part 1026 (which agrees with the “max: amount on the disclosure). Anyone know why we would have a “min and max” amount for an interest only period?

trinna, the same thing is happening with our construction loan disclosures, and we've actually opened a case with our LOS vendor. I'll share whatever we find out.

Thanks, Julie! Would you care to share who your vendor is? Wondering if we have the same one!

We use E3, through D+H.

Lol! And so do we!

Did you find any additional information on the one time closing for construction loans? We use Jack Henry Streamline and they are telling us these types of loans will not be supported by them at all. They are telling me our loan quote and streamline cannot handle them. We always have done one time closing and added the wording "Interest due on the amount outstanding during construction" and our construction phase is 6 months with payments amortized after that at 354 months.

D+H agreed with our findings, and are working on a fix for our construction-perm loans. So, Allshouse, I'd guess your issue is with Jack Henry's streamline.

I am certain my issue is streamline and JH.

Would anyone be willing to send me a sample of what your forms look like for a construction-perm one time closing?

my e-mail is sallshouse@ffsbangola.com

Question for TRID construction loan with the Loan Estimate fess; Interest Reserve, UCC Filing Fee and Cost Analysis, legal fees. Where would these fees on page 2 under Loan Costs be listed? A. origination Charges, B. Services you cannot shop for, C. Services you can shop for and E. Taxes & other Government fees? Thank you, Rebecca

I don't believe your question can be answered without additional info.

Your UCC filing is a recording section fee. Legal fees may or may not be shoppable based on your practices. Cost analysis, if done internally, would be an origination charge section fee...if paid to a 3rd party appraiser or the like, it would be something that cannot be shopped for.

Interest reserve...have no idea.

Thank you!

Hello, Does anyone have an Appendix sample for the Loan Estimate for construction loans. This is very different process and not a lot of information on CFPB, BCG online websites. We are doing some testing and I am not able to find a lot of Compliance information needed for this type of loan. Please send to my work e-mail: rebrand@cbbank.com. Thank you,

Hi Rebecca;

Did you ever get a response for the interest reserve portion of your question?