CFPB Releases Guidance On Construction Loan Disclosures

On January 12, the CFPB released a Construction Loans Fact Sheet reviewing the basics of construction loan disclosures under the TILA/RESPA Integrated Disclosure ("TRID") Rule. This resource briefly summarizes the TRID requirements for construction loans.

Scope

As closed-end consumer credit transactions secured by real property, most construction loans are covered by the TRID Rule. Construction loans subject to mortgage disclosure requirements include those where the creditor extends credit to finance only the cost of the initial construction (construction-only loan), not renovations to existing dwellings, and in transactions where a multiple advance loan may be permanently financed by the same creditor (construction-to-permanent loan). A construction loan that is an open-end transaction or a loan for a commercial purpose is not covered.