The new Integrated Disclosure rules are effective on October 3, 2015. Many lenders are scrambling trying to master the details of the new disclosures. Construction loans are causing problems because there are virtually no details available.
Construction loans are significantly impacted by the new rules. Most construction loans were exempt from the old disclosure requirements; however, these loans will now be covered by the new rules. The CFPB provided few details regarding completion of the Loan Estimate and the Closing Disclosures for these loans. The regulation does not contain sample forms for construction loans. The Commentary only mentions construction loans a couple of times and those references provide little guidance for completing the forms.
Creditors continue to report that loan origination software (LOS) products are not yet ready to produce construction loan disclosures. Apparently some LOS products cannot produce construction disclosures while others produce the disclosures for some construction loan options, but nor for others.
Lenders need solutions. Without details, how do you complete disclosures, or check disclosures produced by your LOS? Without details, how do you determine what construction loan options to offer to your customers? It does not appear likely that the CFPB will provide needed guidance in the coming months.
This webinar is designed to fill the void created by the lack of regulatory guidance for construction loans. It explains coverage and exemption rules. It provides section-by-section guidance on completing the Loan Estimate and the Closing Disclosure for the common construction loan options. It answers the many questions you have regarding the proper disclosure of construction loans.
Upon completion of the program, participants understand:
- When and why construction loans are covered by the new integrated disclosure rules;
- How to complete the loan estimate and closing disclosure for:
- Construction only loans
- Combined construction/permanent loans; and
- Permanent financing that replaces construction financing.
- How to properly estimate interest on a construction loan;
- The impact of a construction only loan versus a lot purchase/construction loan;
- When to disclosure "Sales Price," "Estimated Value," or "Appraised Value;"
- How to determine the proper "Purpose" of the loan;
- How to properly describe the "Product;"
- The proper disclosure of projected payments;
- How to properly disclose inspection fees;
- How to disclose undisbursed construction funds;
- Completing the "Cash to Close," Optional Alternate Cash to Close," and the "Cash to Close" in the Borrower's Summary of the Closing Disclosure;
- When the AP Table is needed and how to properly complete it;
- How to complete the "In 5 years" disclosure for short-term construction loans;
- When to include the "60 days prior to consummation" disclosure; and
- Much more.
TRID for Construction Loans - What the CFPB Failed to Tell Us
Questions and Answers