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If we are doing the entire underwriting process prior to the initial close of the construction loan on a two closing construction to permanent loan program, are we meeting the ATR expectations for the second permanent loan? I’m concerned about the “current” wording used in the rule (1026.43(c)(2)) because the second loan may close up to a year after the initial construction loan.
If you will be doing the permanent phase, we recommend that you underwrite/verify ATR for that phase before consummation of the construction loan, just as you are doing, so you know if you will be able to make the loan. We also recommend that prior to consummation you verify the information you relied on for underwriting/to determine ATR is still accurate and has not changed.
This is more of a safety and soundness issue than a compliance issue but you are doing it accurately. Keep in mind, if you are doing the construction and permanent separately, you need to provide the Loan Estimate for both phases (construction and perm) of the transaction within 3 business days of receiving the construction phase application.
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