You may remember that the TRID requirements and construction loans didn’t exactly start off on the right foot. While the CFPB has taken some steps to reduce the challenges over the years, we see there’s still a lot of confusion out there! One such area has to do with escrow accounts.
Listen to Diane explain more.
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The TRID Rule tells us that these disclosures should reflect whether an escrow account will be established at or before consummation.
If you remember a TRID and construction loans didn’t necessarily get off on the right foot with each other. Hi, I’m Diane Dean with Bankers Compliance Consulting.
Maybe that’s at least part of the reason why construction loans still seem extra challenging yet today. For example, on a construction or permanent loan with one closing where you will not have an escrow account in connection with that initial construction phase, but will set up an escrow account in connection with the permanent financing, how are these disclosures on page four of the closing disclosure to be completed? Well, the TRID Rule tells us that these disclosures should reflect whether an escrow account will be established at or before consummation. So if the initial construction phase will not have an escrow account, these disclosures should reflect the loan will not have an escrow account. If you don’t offer an escrow account option in connection with construction loans, you’re further going to say that the lender does not offer one.
Now this may all be a bit confusing, especially when in six to 12 months you go to set up an escrow account. For that reason, you might want to make sure your lenders are explaining to your borrowers, that those disclosures only reflect what will happen with the initial construction phase. Once we get to the permanent phase, an escrow account will be established and in some cases required, if you’re still having construction loan headaches, we can help. I would recommend our All About Construction Loans webinar. Not only does Jerod walk you through completing the disclosure step-by-step, we also give you sample disclosures that allow you to tie it all together. We want to help you with those construction loan challenges.
Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients.
Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!