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#2153413 - 11/14/17 09:31 AM Builders Risk Insurance
ns Offline
Member

Registered: 08/02/16
Posts: 82
Where would we disclose Builders Risk Insurance for a construction loan closing today but the borrower is paying after closing in 6 weeks when the construction begins? On an addendum? It was disclosed under prepaids on the LE because the officer thought it would be paid before closing. Construction got pushed back due to appraisal issues and the borrower does not want to pay for the insurance until construction begins. Management made the decision to allow the borrower to close without the insurance in place.

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TRID - TILA/RESPA Integrated Disclosures Rule
#2153416 - 11/14/17 09:42 AM Re: Builders Risk Insurance [Re: ns]
rlcarey Offline
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Registered: 07/16/01
Posts: 64016
Loc: Galveston, TX
Depends on who the insurance insures. In most States, it insures the builder and is a requirement of the bank for the builder to carry adequate builder's risk insurance as part of an acceptable construction contract. If the borrower makes an agreement to pay for the contractor's insurance, then that is not a specific requirement of the loan and it normally would be a Section H charge.
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#2153588 - 11/15/17 08:42 AM Re: Builders Risk Insurance [Re: ns]
John Burnett Offline

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Registered: 10/27/00
Posts: 36288
Loc: Cape Cod
But it would not appear in Section H unless it's been paid or is to be paid from closing funds, right, Randy? In this case, it's a post-consummation payment by the consumer.
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John S Burnett
BankersOnline.com
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#2153599 - 11/15/17 09:18 AM Re: Builders Risk Insurance [Re: ns]
rlcarey Offline
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Registered: 07/16/01
Posts: 64016
Loc: Galveston, TX
Correct.
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#2153655 - 11/15/17 11:19 AM Re: Builders Risk Insurance [Re: ns]
John Burnett Offline

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Registered: 10/27/00
Posts: 36288
Loc: Cape Cod
The Bureau added the requirement for an addendum for post-consummation construction loan inspection fees. But it has not addressed post-consummation payment of builder's risk premiums. Therefore, since it's not a finance charge and it's not paid at or before closing, I don't think it gets disclosed. I am certainly open to opposing views.
_________________________
John S Burnett
BankersOnline.com
Professional Compliance Nerd since 1976.

"Illegitimi non carborundum"

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#2153809 - 11/15/17 05:33 PM Re: Builders Risk Insurance [Re: ns]
ns Offline
Member

Registered: 08/02/16
Posts: 82
Thank you!

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