Construction – Permanent Loans – A Look At Construction Lending – ON-DEMAND WEBINARS

Date Recorded: Thursday, March 28, 2019

Presenter: Anetria Connell, Vice President, FORVIS

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 disclosing construction loans difficult as the borrower’s payment and other terms may be unknown at closing. In addition, the original rules for the Truth-in-Lending/ RESPA Integrated Disclosure (TRID) – the Loan Estimate and Closing Disclosure – often did not address how particular aspects of the rule applies to construction loans, although the Consumer Financial Protection Bureau (CFPB) issued clarifications recently.

This webinar, along with the Construction-Only Loans webinar will address these rules. Given the complexity of the topic, we will present the rules regarding construction loans in two different webinars: the first webinar is focused on construction loans only, and this second webinar is fo- cused on construction-permanent loans. These webinars will be presented on consecutive dates – March 27th and 28th. Both webinars will review basic rules under Regulation Z that apply to both, including Appendix D, as well as each type of transaction presents its own issues for disclosure on the Loan Estimate and Closing Disclosure. The webinars also will detail differences that the new clarifications brought. (Compliance with the TRID clarifications were mandatory October 1, 2018.)

HERE IS WHAT YOU WILL LEARN:

• Basic rules on disclosure
• Appendix D
• Disclosures on the Loan Estimate/Closing Disclosures that present unique issues for
  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

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