TRID for Construction Loansttsmedia.ttstrain.com/TRIDLoancWT042716.pdfLoan Estimate -The creditor...
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4/27/2016 1 TRID for Construction Loans 1 Moderator Introduction 2
Transcript of TRID for Construction Loansttsmedia.ttstrain.com/TRIDLoancWT042716.pdfLoan Estimate -The creditor...
4/27/2016
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TRID for Construction Loans
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Moderator
Introduction
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Program Description and Purpose Pages 1-2
Introduction Purpose Goals
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Truth In Lending Act Page 3
Law Regulation Commentary
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Scope – Regulation Z Pages 4-5
Scope Regulation Z Integrated Disclosures
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Scope – Regulation Z Page 6
TRID – Closed-end Consumer Credit Secured by Real Property
Exempt Transactions Covered Construction Transactions Refinance/Renewal
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App. D – Multiple Advance Construction Loans Page 7
Construction Only Permanent Only Construction/Permanent One Close
Combined Separate
Two Close Combined Separate
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App. D – Multiple Advance Construction Loans Pages 7-8
Appendix D Construction Period Disclosed Separately Part I.A. - Interest on Amount Advanced Part I.B. - Interest on Commitment
Amount
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App. D – Part I.A. Page 7
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App. D – Part I.B. Page 8
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App. D – Part II.A. Page 8
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App. D – Examples Page 9
Interest only, payable only on amount actually advanced as defined by the terms of the legal obligation:
$100,000 commitment amount at 5% interest rate for a 12 month term:
Initial payment shown as the Monthly Principal and Interest Payment in the Projected Payments table is $208.33.
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1. Multiply commitment by ½: ½ x $100,000 $50,000
2. Multiply answer by stated interest rate: $50,000 x .05 $2,500
3. Divide answer by term of loan: $2,500/12 $208.33
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App. D – Examples Page 9
Interest only, payable on the entire commitment amount as defined by the terms of the legal obligation:
$100,000 commitment amount at 5% interest rate for a 12 month term:
Initial payment shown as the Monthly Principal and Interest Payment in the Projected Payments table is $416.66.
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1. Multiply commitment amount by stated interest rate:
$100,000 x .05 $5,000
2. Divide answer by term of loan: $5,000/12 $416.66
App. D – Part II.B. Page 10
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App. D – Part II.C. Page 10
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Which Payment Schedule Page 11
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App. D – Multiple Advance Construction Loans Pages 12 - 13
Relationship to § 1026.18(s) Construction and Permanent Separate Construction and Permanent Combined
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App. D – Multiple Advance Construction Loans Pages 13 - 14
Relationship to § 1026.37 and .38 Construction and Permanent Separate Construction and Permanent Combined
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Timing of Disclosures Page 15
Loan Estimate - The creditor shall deliver or place in the mail the Loan Estimate: Not later than the third business day (General
- open for business functions) after the creditor receives the consumer's application. Not later than the seventh business day
(Specific - all except Sunday and holidays) before consummation of the transaction.
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Timing of Disclosures Page 15
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Timing of Disclosures Page 16
Closing Disclosure - The creditor shall ensure that the consumer
receives the Closing Disclosure no later than three business days (Specific - All calendar except Sundays and holidays) before consummation.
If the Closing disclosure is not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail.
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Loan Estimates Pages 18 - 23
Loan Estimate – Construction Only Sample Loan Estimate – Construction to Permanent
Sample
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General Information Page 24
Property
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General Information Page 25
Sales Price
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General Information Page 25
Sales Price – Already own land, just constructing the dwelling.
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General Information Page 25
Sales Price – Purchasing the Land and Constructing the Dwelling
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General Information Page 25
Est. Prop. Value
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General Information Page 25
Est. Prop. Value
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General Information Pages 25 - 26
Loan Term
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General Information Page 26
Purpose
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General Information Page 27
Purpose
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General Information Page 26 - 27
Purpose Purchase – Purchasing land and constructing the
dwelling
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General Information Page 26-27
Purpose Construction – Already own the land, just
constructing the dwelling
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General Information Page 27
Product
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General Information Page 29
Product
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General Information Page 30
Product Features
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General Information Page 30
Product Feature – Interest Only/Balloon Dilemma
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General Information Page 32
Product
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Loan Terms Page 33
Construction Only Monthly Principal & Interest Balloon Payment
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Loan Terms Page 33
Construction/Permanent Monthly Principal & Interest Balloon Payment
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Loan Terms Page 36
Adjustment After Consummation
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Projected Payments Page 40
Construction Only
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Projected Payments Page 40
Construction/Permanent
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Projected Payments Page 44
Construction Phase - Adjustable Rate
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Projected Payments Page 45
Construction to Permanent -Adjustable Rate - Construction Phase
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Projected Payments Page 46
Construction to Permanent - Fixed Rate - 6 Month Term on Construction Phase
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Projected Payments - Escrow Page 48
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Loan Costs Page 51
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Loan Costs Page 53
Construction Loan Costs
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Loan Costs Page 53
Inspection Fees
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Loan Costs Page 53
Services You Cannot Shop For Inspection Fees
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Loan Costs Page 54
Survey Fees
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Other Costs Page 55
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Other Costs Page 57
Prepaids
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Other Costs Page 59
Prepaids – Builders Risk
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Other Costs Page 59
Prepaids – Builders Risk
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IF BUILDERS RISK PREMIUMS ARE
REQUIRED TO BE PAID BY...
AND THE PREMIUMS ARE PAID...
THEN THE PREMIUMS ARE...
The borrower, as required by the creditor,
Either Before or After Closing
Reflected in the Prepaids on a blank line in Section F on the LE and on the CD.
The builder, according to the contract,
Either Before or After Closing
Not reflected on the LE but are shown in the Paid By Others column on a blank line in the Prepaids (Section F) on the CD.
Question BreakPlease submit your questions
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Calculating Cash to Close Pages 62 - 71
General Method Optional Alternative Method
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Calculating Cash to Close Page 68
Construction Holdback – Section H: Other
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Calculating Cash to Close Page 69
Disbursement of Construction Proceeds
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IF THE CREDITOR PREFERS TO ...
THEN IF THE CREDITOR USES THE...
A. GENERAL CASH TO CLOSE
B. OPTIONAL ALTERNATE CASH TO
CLOSE
1. Show the proceeds immediately disbursed to the consumer
Disclose the construction costs as Funds for Borrower
Do not disclose the construction costs as Payoffs and Payments
2. Utilize Section H: Other to show the construction holdback
Disclose the construction costs in Section H: Other the Total Closing Costs (J) and as Funds for Borrower
Disclose the construction costs in Section H: Other in the Total Closing Costs (J)
3. Not utilize Section H:Other to show the construction holdback
Disclose the construction costs in Closing Costs Financed as a negative and as Funds for Borrower
Disclose the construction costs as Payoffs and Payments
Calculating Cash to Close Page 69
Option A.1. - General Method Cash to Close – Disburse at Closing
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Calculating Cash to Close Page 70
Option B.1. - Optional Alternative Method Disburse at Closing
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Calculating Cash to Close Page 70
Option A.2. - General Method Cash to Close if Utilizing Section H: Other
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Calculating Cash to Close Page 70
Option B.2. - Optional Alternative Method Cash to Close if Utilizing Section H: Other
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Calculating Cash to Close Page 71
Option A.3. – General Method Alternative to Disclosing Construction
Costs in Section H: Other
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Calculating Cash to Close Page 71
Option B.3. – Optional Alternative Method Alternative - Disburse Upon Inspections
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Adjustable Payment Table Page 72
Interest Only & Balloon – Fixed Rate
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Adjustable Payment Table Page 74
Construction to Permanent –Adjustable Rate
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Comparisons Page 76
Construction only
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Comparisons Page 76
Construction to Permanent
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Other Considerations Page 78
Revised Disclosure for Construction Loan
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Closing Disclosure Page 80 - 89
Closing Disclosure – Construction Only Sample
Closing Disclosure – Construction to Permanent Sample
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General Information Page 90
Content – Same as Loan Estimate
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Loan Terms Page 92
Content – Same as Loan Estimate
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Projected Payments Page 93
Content – Same as Loan Estimate
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Loan Costs Page 94
Construction Only/Construction to Permanent
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Other Costs Page 95
Construction Only/Construction to Permanent
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Calculating Cash to Close Page 96
Construction Only Construction Costs to be Disbursed to Borrower
at Closing
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Calculating Cash to Close Page 96
Construction/Permanent
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Summary of Borrower’s Transaction Page 100
Construction Only
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Summary of Borrower’s Transaction Pages 101
Construction to Permanent
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Loan Disclosures Page 106
Construction Only
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Loan Disclosures Page 107
Construction to Permanent
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Adjustable Payments Table Page 109
AP Table – Same as Loan Estimate
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Loan Calculations Page 111
Construction Only
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Loan Calculations Pages 111
Construction to Permanent
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Question BreakPlease submit your questions
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Conclusion
TRID for Construction Loans
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Upcoming Webinars
April 28th – Properly Audit Your Safe Deposit Department: 30 Important Steps (2016 Update)
April 28th – Compliance Perspectives: A Monthly Update
April 28th – Opening New Accounts III – Trust, Fiduciary and Minor Accounts
May 3rd – Call Reports: RC-C Loan Coding and Related RC-R Reporting
May 4th – Real Estate Law for Bankers
May 4th – Coaching Excellence
May 5th – Writing an Effective Credit Memorandum
May 5th – All About Escrows
May 9th – Are They Really a Bank Prospect?
May 11th – Understanding Commercial Loan Documentation
