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Stand Alone Construction Loan-Initial TIL/GFE?

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Question: 
Do you need an initial TIL and GFE on a stand alone construction loan to a consumer that owns his own lot?
Answer: 

First, the Preliminary TIL disclosure is only triggered if RESPA is required [see Section 1026.19(a)]. Second, RESPA would apply unless the loan is considered temporary financing [refer to Section 1024.5(b)(3)].

To answer your question, we need to know what's going to happen after the home is contracted. If you bank will then make a permanent financing loan, then RESPA does apply to the construction loan (too). If this is a construction loan only and then the borrower will go to a different lender for permanent financing or will simply pay off the construction loan through some other means, then RESPA will not apply to your construction loan.

First published on BankersOnline.com 2/20/12

First published on 02/20/2012

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