Thread Options
#2243594 - 10/06/20 03:58 PM Home Loan Toolkit Question
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,049
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.
_________________________
Always learning something new...

Return to Top
Lending Compliance
#2243611 - 10/06/20 06:11 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,649
Galveston, TX
How can you have a construction loan subject to RESPA and not Reg Z?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2243622 - 10/06/20 06:46 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,645
Bloomington, IN
The Home Loan Toolkit is required by 1026.19(g). Your construction loan is subject to TRID.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2243655 - 10/06/20 08:33 PM Re: Home Loan Toolkit Question Likes to Comply
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,049
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?
_________________________
Always learning something new...

Return to Top
#2243658 - 10/06/20 09:06 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,649
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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2243659 - 10/06/20 09:07 PM Re: Home Loan Toolkit Question Dan Persfull
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,649
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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2243727 - 10/07/20 05:26 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,645
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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2243762 - 10/07/20 10:15 PM Re: Home Loan Toolkit Question Likes to Comply
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,649
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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2243818 - 10/08/20 07:42 PM Re: Home Loan Toolkit Question Likes to Comply
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,645
Bloomington, IN
I learned something new. I've never paid any attention to that section for whatever reason.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2245994 - 12/01/20 03:29 PM Re: Home Loan Toolkit Question Likes to Comply
Helpcompliance Offline
Junior Member
Joined: Mar 2015
Posts: 31
Kentucky
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.

Return to Top
#2245995 - 12/01/20 03:41 PM Re: Home Loan Toolkit Question Likes to Comply
raitchjay Online
Power Poster
Joined: Oct 2009
Posts: 8,674
OK
No.
_________________________
I'm fixin' to fix that.

Return to Top

Moderator:  Andy_Z