The land is under the customers' names but they owe their relatives $30,000 for the land. To pay their relatives off and construct their primary home,

1. is it going to be construction loan or purchase TRID loan?

Closing Disclosure was sent last week. Now, customer would like to borrow more to pay $30,000 and construct their home.
1. Do they have to fill out a brand new application with the updated loan amount?
2. Do we have to treat it like a brand new loan and start with LE?
3. If not, can I issue a new CD with the updated loan amount?
4. Is it subject to new 3 day wait?

Thank you

1. Sounds like a refinance for TRID, they already hold title, but owe a balance.

I'm not sure why this would not have been known up front, but there is nothing that would require a new app. You don't need to start over, other than your original LE likely has a bad purpose stated. You may have issues with correcting that, depending on your LOS. Nothing is jumping out at me that would require an additional wait period.

[Due to the substantial increase, you may want to review qualifications on the permanent loan].

ETA: Concerning that last thought, it you may make the permanent loan, you may need to act now to adjust that loan amount and potentially higher fees involved.

"Refinance" would depend if they are actually paying off a previous loan that was subject to Subpart C of Regulation Z, which it doesn't sound like it would qualify.

The next stop is "construction".

Totally agree...but had one just like this recently and sure enough...the relatives held a lien.

It is not that there was a lien - it is whether the previous loan was subject to Subpart C of Regulation Z. Personal or family loans would not normally have been subject to Regulation Z.

1026.20(a) Refinancings. A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer.

oh...yeah, gotcha!

Randy, can you explain why it is not subject to Subpart C? It sounds like it is a refi from

"1026.20(a) Refinancings. A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer."

The loan being refinanced has to have been subject to Subpart C, not the current loan. Since this was a loan from a family member, it would not meet the definition unless the family member met the definition of a creditor.

Thank you very much.

Can I tag on to this and ask: We have a customer that owns the land but has a loan it at our bank. We are making a new loan for the construction of their dwelling and the first draw is to payoff the loan that has the dirt as collateral. Is this loan considered a refinance or a construction loan for TRID purposes?

It would be a refinance. You follow the dirt. You are refinancing the dirt, the house does not come into play yet.

Agree

Thanks!! I haven't been working much with TRID at all so I appreciate all the help I can get!