2nd loan balloon with abundance of caution

Posted By: elebra

2nd loan balloon with abundance of caution - 03/15/16 03:00 PM

We have a construction loan that is being amortized out. The first loan will be made in accordance to our policy. The second loan will be made unsecured with a balloon and a mortgage in abundance of caution. The co-signer qualifies for the unsecured portion. Our policy states that unsecured loans won't exceed 36 months. Is a 3 year balloon ok for this type of loan or are we still bound by the 7 year balloon rules since we are taking a mortgage (in abundance of caution)?
Posted By: Skittles

Re: 2nd loan balloon with abundance of caution - 03/15/16 03:04 PM

Remember - the only regulation that 'abundance of caution' gets you out of is the appraisal. All other regulations apply - flood - TRID, etc.
Posted By: Dan Persfull

Re: 2nd loan balloon with abundance of caution - 03/15/16 03:06 PM

Your second loan is dwelling secured therefore it is subject to TRID, 1026.32, 1026.35, 1026.36, 1026.43, Flood, HMDA, etc. In other words the only thing abundance of caution gets you out of are the appraisal requirements in the Interagency Appraisal & Evaluations Guidelines.
Posted By: elebra

Re: 2nd loan balloon with abundance of caution - 03/15/16 03:29 PM

That's what I thought but I was having one of those moments. Thank you both!