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#2099769 - 09/21/16 06:55 PM Construction Loan Increase
FNB Offline
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Joined: Feb 2014
Posts: 36
Borrower would like to increase their construction loan midway through. Does this need redisclosure or LE/CD?
Thank you

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TRID - TILA/RESPA Integrated Disclosures Rule
#2099770 - 09/21/16 06:57 PM Re: Construction Loan Increase FNB
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
If you will be doing a new note or refinancing the current note, yes.
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#2099780 - 09/21/16 07:17 PM Re: Construction Loan Increase FNB
FNB Offline
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Joined: Feb 2014
Posts: 36
If we do an amendment to the note then no?

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#2099792 - 09/21/16 07:59 PM Re: Construction Loan Increase FNB
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
A modification, if allowed by your state law, that does not replace the note, should not trigger disclosures. Consult your bank legal counsel.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2099834 - 09/21/16 10:26 PM Re: Construction Loan Increase RR Joker
crcmnot Offline
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Joined: Sep 2016
Posts: 351
I have an opinion from our external compliance vendor that states that if we are giving new money on an interim-construction loan, it is considered a refinance and we have to pay off the old loan and re-disclose for the new loan amount; we are unable to do a modification to just increase the loan amount. After reading some of the posts, I am not sure if that is correct.

1. If we just prepare a modification to extend a maturity date without giving new money, do we not have to disclose the loan fee for the modification on a new LE/CD?

2. If we are giving new money by increasing the original loan amount, we can do that by preparing a modification only and no new disclosures are required (as long as State law allows the modification)?

Thank you.
Last edited by crcmnot; 09/21/16 10:42 PM.
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#2099853 - 09/22/16 11:00 AM Re: Construction Loan Increase FNB
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
It all comes down to the definitions within 1026.20. If you are in doubt, you should be talking to legal counsel and not a compliance vendor.
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#2199638 - 12/03/18 02:30 PM Re: Construction Loan Increase FNB
meeksfor3 Offline
Member
meeksfor3
Joined: May 2012
Posts: 57
Kentucky
I have a similar question on this subject. If we have a interim construction that is about to mature and the customer needs additional time to complete construction, can we do a modification to extend the maturity date without any additional disclosures other than the modification agreement? Also we were running a construction special at the time of consummation that is no longer available so the modification would need to adjust the rate from .99% to 4.75%. I am leaning toward having to refinance due to the rate change but would like to hear some of the experts weigh in. smile

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#2200001 - 12/06/18 05:57 PM Re: Construction Loan Increase FNB
meeksfor3 Offline
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meeksfor3
Joined: May 2012
Posts: 57
Kentucky
Nobody have any opinions on my question above from earlier this week?

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#2200016 - 12/06/18 07:04 PM Re: Construction Loan Increase meeksfor3
Carolina Blue Offline
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Carolina Blue
Joined: Jul 2005
Posts: 960
Lost in a regulatory fog
As noted above, it's a legal question, but if you are only modifying the maturity date and/or interest rate, then I do not think that would rise to the level of a refinance.

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#2200017 - 12/06/18 07:05 PM Re: Construction Loan Increase FNB
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
It all comes down to the definitions within 1026.20(a). Typically an extension of term even with a change in the fixed interest rate is not a refinance.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2200020 - 12/06/18 07:17 PM Re: Construction Loan Increase FNB
meeksfor3 Offline
Member
meeksfor3
Joined: May 2012
Posts: 57
Kentucky
Thanks for the replies. That what we were thinking as well.

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