Construction Loans Three-Hour Remote Session – ON-DEMAND WEBINARS

Recorded: May 19, 2022

Presented by Ms. Anetria Cohen, Vice President and Senior Consultant, FORVIS

A three-hour remote seminar that delves into the complexities of consumer construction loans,
including construction-permanent loans, focusing on the basic rules and structure of consumer construction loans and construction-permanent loans, as well as the importance of Appendix D.

Construction loans are odd. Often, the institution holds back a certain amount of the loan at closing from which the consumer makes draws during the construction phase to pay for the costs of construction; the consumer makes interest-only payments on the amounts actually drawn; and, an institution may enter into loans where the consumer is obligated on the construction phase only, or may enter into loans where the consumer is obligated on both the construction and the permanent phases. This structure can make understanding and disclosing construction loans difficult.

This remote seminar will focus on the Truth-in-Lending/Regulation Z rules regarding construction loans: the fundamental rules on how an institution may disclose such transactions; the assumptions that Appendix D gives us in determining how to make disclosures; and issues regarding the finance charge and APR.

We’ll also discuss in depth how construction loans and construction-permanent loans are disclosed on the Loan Estimate and Closing Disclosure, the clarifications that the Consumer Financial Protection Bureau provided, and the continuing questions that we have.

Finally, the session will include a review of how construction loans may be treated or exempted under other federal lending compliance requirements, including the Home Mortgage Disclosure Act.

HERE IS WHAT YOU WILL LEARN:

• Basic rules on disclosure
  • Appendix D
  • Finance charge and APR implications
  • Which rules construction-only loans are exempt from
• Disclosures on the Loan Estimate/Closing Disclosure that present unique issues for construction and construction-permanent loans, including:
  • Sale Price when there is no seller
  • Loan Term
  • Purpose
  • Product
  • Principal and Interest Payment, and whether/when to disclose an Increase in Periodic Payment
  • Projected Payments
  • Loan Costs – Construction loan inspection and handling fees and the use of addenda for costs paid after closing
  • Construction reserves/holdback – Where is it?
  • AP Table
  • Calculating Cash to Close examples