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Periodic Statement Apply to Construction Loan?

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  • #5892
    TheBank
    Participant

    Does the new periodic statement rule apply to consumer dwelling construction loans? I am referring to loans that are only to construct the dwelling and the terms are interest only monthly for the draw period, they are for a line limit, and funds are drawn as needed, but the line does not revolve, once funds are drawn, even if paid back those funds cannot be drawn again. When it matures, the loan is either renewed by us through a completely new loan as permanent financing, or permanently financed elsewhere.

    The periodic statement rule applies to closed-end loans, so I guess I am really double checking that these initial constructioni loans without permanent financing would be considered open-end and not required to receive a periodic statement.

    #5905
    rcooper
    Keymaster

    “once funds are drawn, even if paid back those funds cannot be drawn again.”

    This is closed end credit and the periodic statement rules in 1026.41 would apply. The CFPB’s Small Entity Compliance Guide has a table that clearly breaks down exemptions. You can find it here: https://files.consumerfinance.gov/f/201401_cfpb_small-entity-compliance-guide_tila-respa.pdf

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