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Increasing Construction Only Loan-Disclosure

Question: 
I have a personal construction only loan that we are increasing. How do I disclose the fees that are associated with the increase? Can the bank charge a processing fee? The rate and maturity date are not changing.
Answer: 

Dan Persfull

What fees you can charge would be governed by state law.

If the transaction is a refinance under 1026.20 you would need to provide TRID disclosures. If it is not a refinance then generally fees associated with the change-in-terms/modification are generally disclosed in the CIT/Modification agreement. If you are unsure how to disclose them you may want to consult the bank's legal counsel.

Answer: 

Richard Insley

This may be the first time these questions have arisen, but probably won't be the last. After you get answers from the bank's attorney, you should consider adding them to your procedures and training.

First published on 04/18/2021

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