Consumer Construction Loans

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  • #6138

    When preparing the GFE and Initial TIL our processors use 30 days from the date of the GFE for the first payment date.

    When preparing for closing, the payment dates our bank uses are the 5th, 10th, 15th and 20th of each month. Example: If we close on the 6th of a month the first payment would be the 10th of the following month. (We do not collect odd days interest on construction loans as they are billed interest only monthly.) Our system uses the time frame from closing to the first payment to calculate the interest only payment and that is what is shown on the final TIL and HUD as the estimated payment amount. It does not change the APR on the final TIL.

    Since these are interest only loans, is it acceptable to have one estimated payment amount on the early TIL and GFE and a different estimated payment amount on the final TIL and HUD? Or, do we need to make our payment dates 30 days from closing?


    I have forwarded your question on to Jack. He is conducting a seminar today, but should respond to you soon. Thanks for your patience.


    Based on the facts presented in your question it appears your loan is a construction loan. Some constructions loans are exempt from RESPA. The disclosures for a construction loan generally are estimated using the guidelines contained in Appendix D to Regulation Z. It is not clear from your question whether your systems are using Appendix D. The issue of your concern shouldn’t occur if you are using Appendix D.

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