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#2216079 - 06/19/19 10:15 PM
Fixed Rate Construction Only Min/Max payment table
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Joined: Aug 2017
Posts: 62
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Our doc vendor is following a different interpretation for the disclosure of the Projected Payments, Payment Calculation table on page 1 of the LE and CD. We have an 11 month interest only, fixed rate construction only loan, wherein the 12 month is the final payment of principal and interest.
In the Year 1 column, we maintain that based on Appendix D, we assume 1/2 of the loan amount and disclose the interest only payment.
However, our doc vendor is producing disclosures that have a payment range with a minimum based on 1/2 the loan amount and the maximum based on the full payment. While 1026.37(c)(1)(I) and the comments provides for a payment range for interest rate variations, for our construction only loans are fixed rate.
Is there a basis for disclosing a range, and if there is support for disclosing a range for a fixed rate adjustable payment construction only loan, should the minimum be based off of 1/2 of the loan amount and the full loan amount? To me, this looks like a weird expansion of Appendix D. Appendix D provides to disclose 1/2, if we are going to disclose a range, wouldn't be based on the true minimum (which could be $0 unless there's proceeds being used at closing such as financing closing costs) and not a hybridization adaption of Appendix D setting the minimum at 1/2 of the loan amount?
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#2216088 - 06/20/19 12:06 AM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Joined: Jul 2001
Posts: 83,363
Galveston, TX
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See Appendix D Comment 7 v. A. tells you exactly what to do and it does not involve placing a range in the projected payments schedule.
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#2216112 - 06/20/19 12:46 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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The only place ours shows a change is in Monthly P&I and shows only a high [based on fully drawn interest]
Last edited by RR Joker; 06/20/19 12:47 PM.
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#2216120 - 06/20/19 01:18 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Joined: Jul 2001
Posts: 83,363
Galveston, TX
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That is not correct. The only place it would show the fully drawn payment is in the AP Table and not in the Projected Payments Table.
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#2216129 - 06/20/19 02:27 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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The AP table does reflect it...the Loan Terms DOES show it under Can this amount increase after closing. Yes...Give how often it can adjust, how high it can go and how soon and directs them to the AP table for details.
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#2216130 - 06/20/19 02:28 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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The Swamp
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I wasn't referring to the Projected Payments P&I. I should have been more clear.
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#2216187 - 06/20/19 08:51 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Joined: Aug 2017
Posts: 62
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I believe the vendor is treating our construction only loans as a single transaction with the permanent included in the first column too, but the problem is our construction only loans are temporary loans. Due to system limitations, or so I am told, we cannot do construction-perm loans. What happens is the borrower comes in for the construction only loan. They can and usually do apply for a permanent refinancing loan, which is a separate application, completely separate/new underwriting, near or after the end of the construction only loan.
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#2216512 - 06/26/19 03:31 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Joined: Oct 2009
Posts: 9,104
OK
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Unless you have a takeout commitment from another lender, you can't do the "make them re-apply" thing and be in compliance with TRID. If you're doing a construction only loan followed by a perm loan, then you'll need 2 sets of early disclosures provided within 3 business days of the application date.
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#2216517 - 06/26/19 03:40 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Galveston, TX
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raitchjay - that is not true. This was addressed in TRID 2.0. The permanent loan LE has to be delivered within 3 business days of application for the permanent loan. That is whether that happens simultaneously with the construction loan application or somewhere down the line after the construction application. A take-out commitment is not a consideration.
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#2216522 - 06/26/19 04:17 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Sorry for the misinformation then...our construction loan applications here are always one of 2 types--either construction/perm or construction only with a takeout, so i let that color my answer. Again, my apologies.
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#2216526 - 06/26/19 04:31 PM
Re: Fixed Rate Construction Only Min/Max payment table
Katherine
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Joined: Jul 2001
Posts: 83,363
Galveston, TX
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19(e)(1)(iii) comment 5
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