I have a question involving construction loans on a principal dwelling. The revolving construction line was set up for a 24 month draw period. The line is maturing and the construction is not complete and they need to extend it for another 12 months. The line was set up to float at lenders prime. If we extend the line for another 12 months and the lenders wants to continue to float the rate, is this no longer considered a temporary construction loan and would we have to give early disclosures? I hope I have provided enough information to get some help. Thanks.

Is this an open-end LOC or a closed-end LOC? You state it is a "revolving" LOC which for our area is unusual for a construction loan.

If closed-end, your initial 24 month construction loan was subject to disclosures. See 226.19(b) and 3500.5(b)(3).

Redisclosures are not necessary if you are modifying/extending the original note.

It is an open end. Thanks.

Then it's a HELOC and will (again) require all normal HELOC disclosures, including IMHO a right of rescission this time.

I have to correct a statement. The construction loan is a closed end loan. Also, it is still under construction, they have not fully drawn up on the line and it is not at this time their principal dwelling. Thanks.

Are you extending or modifying the original note? If so, no redisclosure is necessary.

If you are "refinancing" the loan, then the disclosure requirements in the above sections will apply if the new loan meets the term lengths and other criteria, i.e varible rate, etc. However, this would still be a RMT and the ROR would not apply.

I'm curious.....are the payments at a fixed amount?