CFPB Issues Fact Sheet Clarifying TRID Implementation and Construction Loans

The CFPB has issued a Fact Sheet clarifying that, in most cases, construction loans are subject to the Loan Estimate and Closing Disclosure requirements of TRID.  The exceptions to the rule are open ended transactions and commercial loans. There are two points of interest for lenders:

Construction to Permanent Financing:  The Fact Sheet reminds lenders that they have the option to treat the construction phase and permanent phase as either one transaction or more than one transaction for purposes of the required disclosures.  The lender has the option to provide a combined disclosure or separate disclosures.  This election exists regardless of whether the construction and permanent phases are closed at the same time or whether there are separate closings.

Multiple Advance Loans:  The Fact Sheet also reminds lenders that Appendix D to RegulationZ provides a procedure to estimate and disclose the terms of construction loans with multiple advances.  The Fact Sheet calls special attention to Comment 7 which “provides guidance for making the projected payments disclosures for construction loans in the Loan Estimate and Closing Disclosure.”