Skip to content
BOL Conferences
Thread Options
#2280314 - 01/26/23 06:24 PM Construction Loans and TRID
Banker75 Offline
Member
Joined: Sep 2021
Posts: 98
If we have a construction loan that is coming up for maturity and we are extending the maturity date and the bank has decided to increase the rate, do we need to provide an LE and then a CD or do we just provide a CD reflecting the new rate?

Return to Top
TRID - TILA/RESPA Integrated Disclosures Rule
#2280316 - 01/26/23 06:28 PM Re: Construction Loans and TRID Banker75
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
If you are not triggering a refinance under 1026.20(a), no new disclosures are required. Typically, unless a modification is adding or changing a variable rate feature, it would not be considered a refinancing. If what you are doing is a refinancing, then all rules will apply to the transaction like any other refinancing you might do.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2280317 - 01/26/23 06:29 PM Re: Construction Loans and TRID Banker75
Banker75 Offline
Member
Joined: Sep 2021
Posts: 98
And while I do agree based on what I have read, this would be considered a refinance per 1026.20a, what the staff is questioning is do we provide all new initial disclosures as if this was a brand new loan or do we provide a revised CD due to a change in terms?

Return to Top
#2280318 - 01/26/23 06:38 PM Re: Construction Loans and TRID Banker75
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Why - what are you doing that makes this a refinance? You are totally replacing and extinguishing the existing obligation under State law? I find that to be very unusual for just a change in the fixed rate and/or maturity date.

Like I said, if it is a refinancing, it would be no different than any other refinancing that you might do. All requirements of Regulation Z, RESPA, etc. will come into play.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2280320 - 01/26/23 06:58 PM Re: Construction Loans and TRID Banker75
Banker75 Offline
Member
Joined: Sep 2021
Posts: 98
rlcarey - In reading I got myself confused in thinking about the increase in rate and adding a variable rate feature. So outside of that, it would not be a refinance, but would we still need to provide something to the customer?

Return to Top
#2280327 - 01/26/23 07:56 PM Re: Construction Loans and TRID Banker75
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Your change in terms (modification) agreement should spell out the terms of the modification. Outside of that no additional disclosure would be required unless it would be under state law requirements.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2280475 - 01/30/23 09:58 PM Re: Construction Loans and TRID Banker75
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
To drive Dan's point home, if the modification is not a refinancing under 1026.20(a), provide the borrower with a copy of the modification agreement. That's it.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top