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#30072 - 08/29/02 04:07 PM Real Estate Construction Loan Disclosures

Periodically with construction of a new primary residence, cost overruns occur resulting in the necessity of creating an additional new promissory note secured by a subordinate deed of trust/mortgage. Typically, the new obligation carries a fixed rate of interest and multiple advances are anticipated. Other than the requirement of obtaining a new flood determination to support the second loan along with providing the borrower with an estimated TIL disclosure, are there any other federal disclosures or requirements that I am not aware of that I need to contend with?

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Lending Compliance
#30073 - 08/29/02 05:05 PM Re: Real Estate Construction Loan Disclosures
Andy_Z Offline
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Good news. You get to save time and money because a flood isn't required. David D. pointed me to this Federal Register cite and it has been useful more than once. Look to pg. 45697-45698

Two commenters pointed out that pursuant to section 1365 of the 1968 Act, a lender cannot rely on a previous determination set forth on a SFHD form when it makes a loan, only when it increases, extends, renews or purchases a loan. The agencies agree with this interpretation of section 1365 of the 1968 Act but note that subsequent transactions by the same lender with respect to the same property will be treated as renewals and will require no new determination.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#30074 - 08/29/02 05:22 PM Re: Real Estate Construction Loan Disclosures

Andy, thanks for the information along with the good news concerning the flood determination.

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