What We Know

CFPB Issues Fact Sheet Clarifying TRID Implementation and Construction Loans  

March 4, 2016 | by Caren D. Enloe

The CFPB has issued a fact sheet clarifying that, in most cases, construction loans are subject to the Loan Estimate and Closing Disclosure requirements of TRID. Exceptions to the rule include open-ended transactions and commercial loans. There are two points of interest for lenders:

Construction to Permanent Financing: The Fact Sheet reminds lenders that they have the option to treat the construction phase and permanent phase as either one transaction or more than one transaction for purposes of the required disclosures. The lender has the option to provide a combined disclosure or separate disclosures. This election exists regardless of whether the construction and permanent phases close at the same time or separately.

Multiple Advance Loans: The Fact Sheet also reminds lenders that Appendix D to Regulation Z provides a procedure to estimate and disclose the terms of construction loans with multiple advances. The Fact Sheet calls special attention to Comment 7 which “provides guidance for making the projected payments disclosures for construction loans in the Loan Estimate and Closing Disclosure.”

Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws.  Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker.  ...LEARN MORE

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