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#2253936 - 05/14/21 04:35 PM Re: Single Transaction Combined Construction LE Luv2run
rlcarey Online
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rlcarey
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Posts: 83,226
Galveston, TX
Correct - a 30 year fully amortizing loan has one column - Years 1-30. The first year is not a standalone requirement. It all depends on if there is a payment change.
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TRID - TILA/RESPA Integrated Disclosures Rule
#2254262 - 05/24/21 02:46 PM Re: Single Transaction Combined Construction LE Luv2run
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This topic is still frustrating me. The point where the table starts would seemingly make a difference for certain scenarios. If it starts at closing, then that is going to result in a different range compared to if it starts with the first payment. For example, lets say there is a 11-month Interest Only Construction Phase with a loan that closes 2/15/2013. If you start the table based on the closing date with a normal 1st payment that would be due 4/1/2013, then your 1st stream would take you through February 2014. If permanent phase payments began 3/1/2014, then you would have a "Year 1" that encompasses just Interest Only payments, as the P & I starts after the 1 year range would end on 2/14/2014. However, if the 1 year period begins with when the 1st payment is made (4/1/2013), then you would have the 11 interest only payments and the 1st permanent phase P & I payment on 3/1/2014 both within the "Year 1" range. So, depending on which you use, the table would be different. Either "Year 1" encompasses the Interest Only payments and that's it, or it encompasses both.

Using the LE on the CFPB site as an example, they seem to utilize the date from when the 1st payment begins. https://files.consumerfinance.gov/f...ly-adjustable-rate-loan-sample-H24C.pdf. Otherwise (if using the closing date), assuming a 4/1/2013 first payment, based on the 2/15/2013 close, you would have the P & I phase kick in on 4/1/2018. Comparing 4/1/2018 to the close date of 2/15/2013 would put the former in Year 6, as 5 years would end on 2/14/2018. In that case the table should be "Years 1-6" in the 1st column and not "Years 1-5." But, I don't feel this jives with a literal understanding of "Year 1," which would more readily be understood as from the closing date.

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#2254263 - 05/24/21 02:49 PM Re: Single Transaction Combined Construction LE Luv2run
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I feel like the lag in closing date vs. when the 1st payment is due creates a lot of confusion here that I am not sure the CFPB accounted for properly. Perhaps this is something that has been expounded upon in more detail, but I haven't seen much "chatter" on this issue myself.

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#2254272 - 05/24/21 03:37 PM Re: Single Transaction Combined Construction LE Luv2run
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
You are getting hung up on the first payment date on a construction loan, but that is not how monthly payments are calculated according to Appendix D. Normally however, the projected payments table is based on the anniversary of the initial payment due. Your link is for an ARM loan and not a construction loan.

I assume you have read this? https://files.consumerfinance.gov/f/documents/cfpb_trid-combined-construction-loan-guide.pdf

Paragraph 37(c)(1)(i)(D).
1. Anniversary of the due date of initial periodic payment. Section 1026.37(c)(1)(i)(D) provides that the anniversary of the due date of the initial periodic payment or range of payments that immediately follows the occurrence of multiple events described in § 1026.37(c)(1)(i)(A) during a single year is an event that requires disclosure of additional periodic payments or ranges of payments. Section 1026.37(c)(1)(i)(A) provides that a potential change in the periodic principal and interest payment is an event requiring disclosure of additional separate periodic payments. See comment 37(c)(1)(iii)(B)-1 for an example of the application of § 1026.37(c)(1)(i)(D).
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#2254311 - 05/24/21 09:10 PM Re: Single Transaction Combined Construction LE Luv2run
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I understand it is not how the payment amount itself is calculated, but it would generally be when the payment starts still. Yes, I used the ARM just to show an example of how the Projected Payments table seemed to be calculated. As you are likely well aware, there is no Sample Form LE or CD for construction loans. As a matter of fact, the guide you linked uses the same 5-year Interest Only ARM in the pictures. Yes, I have read the guide. It doesn't reference when the table begins, it just says "if the construction phase is less than one year." It doesn't say how this one year period is calculated, i.e. whether from closing date or first payment date.

The reference you quoted is not a "fun" read and would not quite seem to indicate a definitive answer. It seems to say, in more layman's terms, that the anniversary of the initial payment or range of payments is an event that requires another payment column if it follows the occurrence of multiple events that cause payment changes. If the closing date is used to establish the dates of the table, then there is no "multiple" events causing a payment change. There is solely the interest only payment stream.

All in all, what would your understanding be for an 11-Month Construction-Perm as I described? Sounds like you are pointing to having the Interest-Only and the 1st Payment of the Perm phase P & I in the "Year 1" column using the range disclosures.

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#2254315 - 05/24/21 09:57 PM Re: Single Transaction Combined Construction LE Luv2run
rlcarey Online
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rlcarey
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Posts: 83,226
Galveston, TX
Yes - on the true 11 month construction loan, year 1 would include both the estimated construction interest payment and the first P&I payment.
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#2254332 - 05/25/21 01:10 PM Re: Single Transaction Combined Construction LE Luv2run
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smile

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