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  • #203376

    We are doing a TRID loan and are unsure what to put for the Purpose on the LE and CD. The borrower closed a loan with us a year ago to construct their personal residence. (construction to permanent financing) They have complete the house but still owe the contractor $100,000. They are taking a 2nd mortgage with us (monthly payments) solely to payoff the contractor. Do we use Construction or Equity for the purpose of the TRID disclosures? Do we collect the government monitoring information?


    The loan is not used to purchase the property.

    In my experience, most lenders would refinance the loan and include the balance due to the contractor. But it appears that you are not refinancing the loan.

    Since your loan is not for purchase or refinance, and the credit will not be used to finance the initial construction of a dwelling on the property identified in paragraph (a)(6), since the dwelling is already complete, that leaves “Home Equity” as the Purpose, by default.

    Government monitoring information is required by Regulation B or by HMDA.
    * Regulation B requires collection if the loan is to purchase or refinance a loan. That does not appear to be the case.
    * HMDA requires collection for closed-end mortgage loans made by HMDA reporting banks. You did not provide information to use to determine if your institution is covered by HMDA. If your institution is covered by HMDA then collection of monitoring information for the loan in question would be required.

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