Lender sent a request for closing disclosures to be prepared for a construction loan, and noted that the title company is requesting an additional $20k down in order to receive an early start on their build. Is a revised LE required before issuing a CD? (Is this even a valid changed circumstance?)
The lender learned that the borrower started construction early and requested early start coverage from the Title Co. Title responded that the additional funds are needed and will hold in escrow and disburse as needed.
No - a requirement to establish an escrow reserve account would not be subject to the tolerance tests. Whether you want to issue a courtesy LE because it will substantially increase their cash to close is another questions.
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