On May 31, 2019, the CFPB updated its TILA-RESPA Integrated Disclosure (TRID) FAQs related to generating the Loan Estimate and Closing Disclosure for construction loans.
The first FAQ restates that a construction or construction-permanent loan will generally be covered by TRID if the loan:
is made by a creditor as defined in Regulation Z, 12 CFR § 1026.2(a)(17);
is secured in full or part by real property or a cooperative unit;
is a closed-end, consumer credit transaction;
is not exempt for any reason listed in 12 CFR § 1026.3; and
is not a reverse mortgage subject to 12 CFR § 1026.33.
The second FAQ lists the special disclosure provisions of Regulation Z that apply to construction loans. The first provision, 12 CFR § 1026.17(c)(6), permits a creditor to treat a construction-permanent loan as either one or multiple transactions. The second provision, Appendix D to Part 1026, provides methods for estimating the construction phase financing disclosures. The third provision, 12 CFR § 1026.19(e)(3)(iv)(F), applies to new construction only. If a creditor reasonably expects that settlement will occur more than 60 days after the original Loan Estimate is provided for the new construction loan, the creditor may provide revised disclosures at any time prior to 60 days before consummation if the creditor advises that this may occur with a clear and conspicuous statement on the original Loan Estimate.
Please note, DocMagic supports construction and construction-permanent loans under the final TRID rule, and will not make any changes related to the publication of the additional FAQs, which simply restate construction loan information previously provided by the CFPB in other sources.