As it pertains to an initial construction loan, what amount do we show for estimated property taxes on the Loan Estimate (and Closing Disclosure)? Would it be the amount of taxes currently paid on the propery as vacant land? Or would it be the property taxes that will be assessed after the dwelling is complete? I'm thinking it would be the vacant land amount as the assessor will assess property taxes upon completion of construction for final taxes, right?

From 1026.37(c)(5):

"(5) Calculation of taxes and insurance. For purposes of paragraphs (c)(2)(iii) and (4)(ii) of this section, estimated property taxes and homeowner's insurance shall reflect:

"(i) The taxable assessed value of the real property securing the transaction after consummation, including the value of any improvements on the property or to be constructed on the property, if known, whether or not such construction will be financed from the proceeds of the transaction, for property taxes; and

"(ii) The replacement costs of the property during the initial year after the transaction, for amounts identified in § 1026.4(b)(8)."

As the reg uses the caveat "if known", if we do not know the estimated property taxes that include the value of the SFR to be constructed (because not known within 3 days), then we would discloose the estimated property taxes on the land value? Or, I suppose this then kicks in the "good faith" requirement where we contact the tax assessor based on the "property value" at completion as given to us by the consumer? How are others coming up with the estimated property tax for an interim construction loan?

From the preamble to the regulation:

The Bureau believes that creditors will determine appropriate and efficient methods to make good faith estimates of such amounts based on the best information reasonably available, and that it is not appropriate to prescribe by rule the exact method that creditors must use to make such estimates.

The tax rates in most places are not a secret nor is the method used to compute property taxes. This is one area that banks are going to have to be prepared to address - based on a "good faith effort" of course.

What about property insurance? Does anyone have a reliable and consistent method to estimate property insurance across multiple regions?

I have this same question about insurance on the LE for a construction loan. Any suggestions on the best way to estimate for a construction loan without having to call insurance companies?

Tax estimators exist. This should be a big problem...but insurance is another matter entirely. Location, location, location...and materials...is going to be a huge issue to figure out.

I'm comfortable with our estimates on taxes but no real solution for insurance....

Anyone have any thoughts on insurance estimation?

You mean you don't have a ballpark estimate of what homeowner's insurance is going to be on a completed structure?? What have you been doing for the last 5 years on the GFE on purchase transactions for disclosing homeowner's insurance???

We do but I wasn't sure if that estimation was still enough. I know this is an unlimited tolerance item but with all the emphasis on making these figures "in good faith" I didn't know if we had to go to some additional effort to get as absolutely close as possible. I must be starting to overthink some of this...

If your current estimates as not "in good faith" you are in current violation of RESPA. Nothing regarding that requirement has really changed.

For construction loans we require a Builder's Risk Policy, which will be disclosed under the Pre-paid section. However, in the estimated taxes and insurance section on the first page of the Loan Estimate, we would only disclosed the estimate amount for Homeowner's Insurance, not the Builder's Risk Policy?

Right now our system is disclosing the Builder's Risk and Property taxes. I can add an estimate for Homeowner's Insurance, but it will double the estimated amount because it will still disclosed the Builder's Rick Policy, as well.

In summary, the estimated property cost should only disclose the amounts for Property taxes and Homeowner's insurance, and leave Builder's Risk out?

Per the recent Compliance Resource webinar, the premiums for Builder's Risk Insurance are included in the Estimated Taxes and Insurance section.