We sometimes run into situations were our borrowers do not have builders risk insurance in place once we close the construction only loan. We ask for them to have the insurance before construction begins. We disclose the insurance on the Loan Estimate under prepaids. Once we get to the closing disclosure and we know they customer won’t be paying for the insurance until after closing do you leave the Insurance Premium blank on the CD? Thank you for your help!
The TRID rules no not specifically addresses how to disclose builder risk premiums. The product is similar to inspection and handling fees. When inspection and handling fees are paid after closing they do not appear on the CD, but instead appear on an attachment to the CD. We believe that if the CFPB clarifies builders risk premiums paid after closing they would use the same logic as for the inspection and handling fees. Until the CFPB clarifies the proper handling of builder risk premiums, we suggest, if the borrower will pay the charge, that the charge be included included in the prepaids.
For several years the CFPB was cranking out TRID guidance on a frequent basis, now it seems they have grown bored with the topic when there are still numerous areas that need clarification. We will continue to watch for clarification through regulatory guidance or through reported violations.