Can you address guidance, or a lack thereof, regarding one-time-close construction programs and the closing disclosure specifically?

The CFPB put out examples of several different types of transactions and did not put out any examples of single-close construction-to-permanent loans. There are some challenges I’m aware of for completing the form. The projected payment table can be hard to do for a single-close construction-to-permanent loan. However, the Bureau has always had a view that even for a loan that’s only technically closed once, a construction-to-permanent loan can be disclosed as two separate transactions for disclosure purposes. I think some people don’t like that and it’s a practical challenge. But the construction phase technically can be disclosed as one transaction and the permanent phase as another, and that eliminates a lot of the problems. That’s basically where the Bureau left it–the Bureau has never come out and given an example of how to do the projected payments table or anything else with the single-close construction-to-permanent disclosed as one transaction. I think there’s a belief, right or wrong—maybe wrong—that the market would basically elect to do two disclosures. And that’s why in the May webinar the Bureau was talking about 12 C.F.R. 1026.17(c)(6), which is old news (it explains a construction-to-permanent loan can be disclosed as two transactions). Of course, that doesn’t make it any easier for people who want to do one disclosure. They certainly are allowed to, it’s just a matter of figuring it out.

Answered By: Andy Arculin