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Disclosing construction loans within the TRID guidelines can be a challenge. There are a lot of rules to remember and apply appropriately. One area that we see issues with from time to time is disclosing inspection fees/waivers.
Jerod explains more in the video.
TRANSCRIPT:
So construction loan inspection and handling fees, and lien waivers are often what they're described as sometimes.
First off, if you collect them upfront, so if the intent is to collect inspections and waivers and things like that at closing, then simply disclose them in the loan cost table in the appropriate section, A, B, or C, depending on whether your fees, third party shop-able fees, or a third party you're picking the provider fees. That's the path of least resistance, that's going to be the easiest to handle. Disclose them up front on page two of the loan estimate.
The regulation also allows you, page 19, to collect them after consummation, but then you need to understand that there are additional moving parts, so do this. It can be done, there's just more red tape to follow. So if you're collecting them after consummation they still have to be disclosed but you're going to have to do an addendum with some special headings. And then the information you disclose in that addendum needs to roll back into the loan estimate on page three when you do some of your comparisons for total fees paid and things like that that we'll cover a little bit later on. That's the second paragraph you'll see underneath B.
Now there's also a note there that if you over-collect and they're inaccurate, or you under-collected they're inaccurate, that will not be a tolerance violation provided it's all done in good faith. This really kind of leads me to number C, when you disclose based on an unknown number of disbursements, so I'll kind of go back up to letter A, and let's say we plan to collect five different lien waiver charges but there ends up being seven, as long as the initial disclosure was made in good faith at five and we had no reason to believe it should have been seven you can still collect seven and have it not be a violation. It's got to be based on good faith and potentially previously a charged transaction. So that would be part of demonstrating your good faith along the way.
Published
2022/07/11
