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Clarification of when early disclosures are required

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  • October 17, 2013 at 8:47 am EDT #4051
    HMDA Guy 78
    Member

    Can someone confirm for me regarding RESPA and early disclosures for construction loans?

    1) Construction loan (12 months) – to be re-financed / sold on the secondary market at the end of loan – early disclosures are NOT required.
    2) Construction loan (12 months) – to be re-financed into long term by our institution – early disclosures ARE required.
    3) Construction loan (12 months interest only) – no mention of long-term financing is made in the loan file – are early disclosures required?

    Thanks!

    Chris

    October 17, 2013 at 9:49 am EDT #4053
    rcooper
    Member

    My opinion is that if you don’t have a firm take out commitment from another lender for the permanent financing, then the loan “may be converted to permanent financing by the same lender” (you), and, therefore, would not be exempt from RESPA.

    October 17, 2013 at 9:52 am EDT #4054
    HMDA Guy 78
    Member

    Thanks, Robin. Those were my initial thoughts – just having doubts since I couldn’t find anything in the reg or commentary specifically saying as much. I appreciate your help!

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