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#2243594 - 10/06/20 03:58 PM Home Loan Toolkit Question
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Diamond Poster
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In the mountains
We originate 1 yr construction only loans. We do not require the borrower to provide any evidence that they will take out the permanent financing elsewhere and in most cases the permanent financing is taken out with us after construction is complete.

Both RESPA and Reg Z outline the requirements for the Settlement Information Booklet. Under RESPA rules, would we have to provide a copy of the Home Loan Toolkit for our 1 yr construction only loans?

Thanks in advance.
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#2243611 - 10/06/20 06:11 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
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rlcarey
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Galveston, TX
How can you have a construction loan subject to RESPA and not Reg Z?
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#2243622 - 10/06/20 06:46 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
The Home Loan Toolkit is required by 1026.19(g). Your construction loan is subject to TRID.
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#2243655 - 10/06/20 08:33 PM Re: Home Loan Toolkit Question Likes to Comply
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In the mountains
I wasn't trying to imply it wasn't subject to Reg Z, but I was looking at RESPA in a box.

So since the Home Loan Toolkit need not be provided for a consumer transaction that is not for the purchase of a 1-4 family residential property, does this mean that it only has to be given on a construction loan if that loan is also for the purpose of purchasing the land?
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#2243658 - 10/06/20 09:06 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
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rlcarey
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Galveston, TX
Even RESPA specifically says:

1024.6(a)(3) In the categories of transactions set forth at the end of this paragraph, the lender or mortgage broker does not have to provide the booklet to the borrower.

Any other federally related mortgage loan whose purpose is not the purchase of a 1- to 4-family residential property.
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#2243659 - 10/06/20 09:07 PM Re: Home Loan Toolkit Question Dan Persfull
rlcarey Online
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rlcarey
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Galveston, TX
Originally Posted by Dan Persfull
The Home Loan Toolkit is required by 1026.19(g). Your construction loan is subject to TRID.


Only on purchase money loans.
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#2243727 - 10/07/20 05:26 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Randy, the construction loan meets the definition of a Residential Mortgage Transaction defined in 1026.2(24). Are you implying the construction loan would not be a purchase money transaction and exempt from the Home Loan Toolkit requirement? I'm asking because I specifically referred to the construction loan being subject to TRID in my post.

(24) Residential mortgage transaction means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer's principal dwelling to finance the acquisition or initial construction of that dwelling.
Last edited by Dan Persfull; 10/07/20 07:33 PM. Reason: Add comment.
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#2243762 - 10/07/20 10:15 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
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rlcarey
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Galveston, TX
A construction only loan is not a purchase transaction however unless it involves the purchase of the lot also.

1026.19(g)(1)(iii) The creditor or mortgage broker need not provide the booklet to the consumer for a transaction, the purpose of which is not the purchase of a one-to-four family residential property.
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#2243818 - 10/08/20 07:42 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
I learned something new. I've never paid any attention to that section for whatever reason.
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#2245994 - 12/01/20 03:29 PM Re: Home Loan Toolkit Question Likes to Comply
Helpcompliance Offline
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Is the Home Loan Toolkit required if they purchase land only for consumer purposes, and they may build in the future, but no specific time is known? According to the borrower, if they build, it will be more than 12 months in the future.

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#2245995 - 12/01/20 03:41 PM Re: Home Loan Toolkit Question Likes to Comply
raitchjay Online
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OK
No.
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#2283745 - 04/24/23 04:41 PM Re: Home Loan Toolkit Question Likes to Comply
BA13 Offline
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Regarding the toolkit and the purpose of purchasing a 1-4 family dwelling, we have a borrower purchasing 10 acres that includes a house but he states the house is uninhabitable. We wants the property for the land & outbuildings and hopes to build a home someday (no timeframe given). The lender doesn't feel the toolkit it required because the borrower isn't purchasing it for the home. That doesn't change the fact there's a house on the property. Does the home have to be considered "liveable" to be considered a dwelling?
We have 3 days to disclose so after a quick assessment - the county is assessing it as a dwelling and it sure looks like one (GoogleEarth). We feel the toolkit it required.

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#2283746 - 04/24/23 04:45 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
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rlcarey
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Galveston, TX
The property contains a house - consumer loan secured by residential real property. Future use has nothing to do with it. What part of that are they having a hard time understanding.

Federally related mortgage loan means:

(1) Any loan (other than temporary financing, such as a construction loan):

(i) That is secured by a first or subordinate lien on residential real property, including a refinancing of any secured loan on residential real property, upon which there is either:

(A) Located or, following settlement, will be constructed using proceeds of the loan, a structure or structures designed principally for occupancy of from one to four families (including individual units of condominiums and cooperatives and including any related interests, such as a share in the cooperative or right to occupancy of the unit);
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