When it comes to construction and permanent financing loans we do two separate closings for each loan type. On the construction loan interest is payable only on the amount actually advance for the time it is outstanding. On the Loan Estimate for construction only loan the Adjustable Payment (AP) table has a payment amount under the Maximum Payment section. The payment disclosed is the maximum payment if the loan amount was half disbursed. This is confusing because it states that is the maximum payment and it could occur as early as the 1st payment when it is not the maximum payment since it is only going by if the funds were half disbursed.

My question, is there an alternative to make it less confusing? I've read Appendix D numerous times and I still believe I'm missing something. When I read the amendments I assumed that it would be maximum payment if the loan was fully drawn based on 7(iv)(B). However, when testing a construction loan the payment came out what I stated above.

Your doc prep program has an error - the max payment would be based on the full amount disbursed.

With that said, Appl. D would still apply if the loan was fully drawn at closing? This seems to contradict the 50% draw rule in the
Appendix? Is this for the LE only or does it flow thru to the CD also?

Dodge - is your LOS up to date? Our LOS was updated prior to 10/1/18 so that our LE/CD's now reflected the AP table for fixed rate temp construction loans. It also updated the 'can this amount increase after closing' from 'no' to 'yes'. Prior to this update, our LOS based the interest payment on 1/2 of the available funds being advanced.

Our's updated as well for applications taken on or after 10-1. It's a great improvement, however our LOS has two options...and has an effect on the wording in the 'can this amount increase after closing' to 'goes as high as'.

The Monthly P&I displays at 50%. This is true on the LE and the CD. The payment over to the right has 'can go as high as" and displays the payment as if fully drawn and that can happen IN month 1 because there is no way to know/guess HOW quickly a loan might be fully drawn. This does not imply that it would be fully drawn at closing. If that were the case, it would not be disclosed as a closed end LOC and would not use Appdx D.

Our LOS was updated a little before the effective of 10/1/2018 with TRID 2.0. The maximum payment in the AP table and the payment over to the right on the first page was incorrect, and after I notified them they were able to correct it. Now the payment to the left is disclosed as if the loan amount was 1/2 drawn and the payment to the right is disclosed as if the loan amount was fully drawn.

Glad you got it straightened out!

I messed up some wording above going back and forth on specifics...

Ours updated as well for applications taken on or after 10-1. It's a great improvement, however our LOS has two options...and has an effect on the wording in the 'can this amount increase after closing'. The options are 1) 'Can go as high as" and 'goes as high as'. It depends on the legal set up of the note:


Note Buydown Provision Required [if you leave this unchecked - uses 'can go as high as'. If you check it, you also get the following option.

Buydown Part Of Legal Obligation


and if you check the following, it changes to 'goes as high as'

Are you have issues with your LOS disclosing in the AP Table, under Monthly Principal and Interest Payments, First Change/Amount, a range of payments that goes from $0 to the maximum amount based on a full draw on the loan amount? Our LOS is not blanking it out though the regulation allows for it, and the $0 is incorrect because even on the LE, most of the time part of the closing costs is being financed by the loan amount so there would not be a $0 payment?

Additionally, for the "interest only payments?" are you having any issues with the LOS populating it with the loan term, for example "12 months" instead of "for your first 11 payments" (for a loan with 11 months interest only and the 12 month interest +final/balloon payment)?

Why is your LOS showing a range? Are your CL's VR and maybe that's a requirement for VR loans? [I ask because mine are all fixed rate, so I've not really studied the difference]

I have no clue. Basically, we've had to manually edit our disclosures since the inception of TRID and it hasn't gotten much better. It's a fixed rate. I think they're showing it as if nothing were drawn (so starting at $0) and then the range is if the loan was fully disbursed. I advised them to have the LOS blank it out or most of our loans have the closing costs financed, so if there's going to be a range, it needs to start based on the amount that is showing as being initially disbursed to cover closing costs. My guess is we will have to manually blank out that range or risk an error in the calculation.