{"id":2890,"date":"2022-07-22T16:18:18","date_gmt":"2022-07-22T16:18:18","guid":{"rendered":"https:\/\/albanknews.com\/?p=2890"},"modified":"2022-07-22T16:18:41","modified_gmt":"2022-07-22T16:18:41","slug":"2890","status":"publish","type":"post","link":"https:\/\/albanknews.com\/?p=2890","title":{"rendered":"TRID Construction Loan Considerations"},"content":{"rendered":"

QUESTION: <\/strong>For a TRID construction loan disclosed as two transactions, what should we disclose as the interest rate if it\u2019s variable we don\u2019t know what the rate will be during the permanent phase?<\/p>\n

ANSWER<\/strong>: If it will have an adjustable rate and the rate is unknown when the Loan Estimate is provided, the bank should disclose the fully-indexed rate, which is the rate calculated using the index and margin at the time of consummation. If the index and margin that will be in effect at consummation must be provided, the fully-indexed rate disclosed may be based on the index in effect at the time the disclosure is delivered.<\/p>\n

\u201c1. Interest rate at consummation not known. Where the interest rate that will apply at consummation is not known at the time the creditor must deliver the disclosures required by \u00a7 1026.19(e), \u00a7 1026.37(b)(2) requires disclosure of the fully-indexed rate, defined as the index plus the margin at consummation. Although \u00a7 1026.37(b)(2) refers to the index plus margin \u201cat consummation,\u201d if the index value that will be in effect at consummation is unknown at the time the disclosures are provided under \u00a7 1026.19(e)(1)(iii), i.e., within three business days after receipt of a consumer’s application, the fully-indexed rate disclosed under \u00a7 1026.37(b)(2) may be based on the index in effect at the time the disclosure is delivered. The index in effect at consummation (or the time the disclosure is delivered under \u00a7 1026.19(e)) need not be used if the contract provides for a delay in the implementation of changes in an index value. For example, if the contract specifies that rate changes are based on the index value in effect 45 days before the change date, creditors may use any index value in effect during the 45 days before consummation (or any earlier date of disclosure) in calculating the fully-indexed rate to be disclosed. See comment app. D-7.iii for an explanation of the disclosure of the permanent financing interest rate for a construction-permanent loan.\u201d<\/p>\n

Comment\u00a037(b)(2): https:\/\/www.consumerfinance.gov\/rules-policy\/regulations\/1026\/interp-37\/#37-b-2-Interp<\/a><\/p>\n

 <\/p>\n

\n

Compliance Alliance<\/strong> offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933<\/strong> or email info@compliancealliance.com<\/a> and ask for our Membership Team.<\/p>\n

Sign Up for a demo:<\/strong><\/p>\n