I am looking for clarification on the Loan Estimate's Calculating Cash to Close table when doing a construction loan. I have been reading mixed reveiws on how construction funds should be disclosed on the LE. At one point we listed them in the Estimated Total Payoffs and Payments to get our Estimated Cash to Close table to show $0 going to the customer. A outside reviewer of ours told us that we should be not be listing $0 in the Payoffs & Payments section and show the borrower receiving the construction funds (even though customer really isn't physically receiving the money) in the Estimated Cash to Close table.

In reading the regulation, it states the Estimated Total Payoffs and Payments should reflect third party payments and payoffs that were not otherwise disclosed. The bank is not a third party in the construction loan transaction, so I don't feel the funds should be listed there. But I have also read, TRID 2.0, that if we are using the alternative cash to close table we should be placing the construction funds in the Estimated Total Payoffs and payments.

Thanks for any clarification.

If you are not handing the borrower a check at closing, your cash to close should not indicate they are receiving any cash. You need to find a new outside reviewer.

Alternative Version

37(h)(2)(iii) Payoffs and payments.
1. Examples. Examples of the amounts incorporated in the total amount disclosed under § 1026.37(h)(2)(iii) include, but are not limited to: construction costs associated with the transaction that the consumer will be obligated to pay in any transaction in which the creditor is otherwise permitted to use the alternative calculating cash to close table;

Standard Version

Paragraph 38(j)(1)(v).

2. Other consumer charges. The amounts disclosed under § 1026.38(j)(1)(v) which are for charges owed by the consumer at the real estate closing not otherwise disclosed under § 1026.38(f), (g), and (j) will not have a corresponding credit in the summary of the seller's transaction under § 1026.38(k)(1)(iv). For example, construction costs in connection with the transaction that the consumer will be obligated to pay,