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TRID – Loan Terms

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  • #7131
    compdud
    Member

    Under loans terms the subheading is to be answered with either yes or no.
    Can you give me some examples of a “yes” answer and information pertinent to the adjustment for “can the loan amount increase after consummation?”
    Thanks!

    #7132
    kowsley
    Member

    Under the loan terms section of the Loan Estimate or the Closing Disclosure it would be possible for the loan amount to increase after consummation in the case of a loan that has negative amortization as a feature of the loan. You can refer to 1026.37(b)(6) that states: The maximum principal balance for the transaction and the due date of the last payment that may cause the principal balance to increase. The disclosure further shall indicate whether the maximum principal balance is potential or is scheduled to occur under the terms of the legal obligation.

    In other words, you would list the maximum amount the principal balance can increase to or has the potential to increase to by using the terms, “Can go as high as…”. Also, you would indicate the due date of the last payment that may cause the principal balance to increase by using the phrase “Increases until.”

    Refer to H-24(F) in Appendix H to Part 1026 to see an example of a model form with negative amortization and the description listed when the loan amount can increase.

    #7135
    compdud
    Member

    So is negative am the only time the answer would be yes for can the loan amount increase after consummation?

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