MDIA - Reg Z Temporary Financing Exemption

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Question:

Do we need to provide a TIL disclosure within three business days of receiving an application for a construction loan on applications received after July 30, 2009? Our construction loan term is twelve months or eighteen months. Are we allowed the temporary financing Reg Z exemption under the new MDIA ruling?

Answer:

Providing the ETIL within three business days of receiving an application was a requirement of 226.19(a), if the loan was a RMT subject to RESPA before the MDIA amendments; and it is still a requirement. The MDIA amendments did not change that timing requirement, but they did incorporate all mortgage loans and not just RMTs (Residential Mortgage Transaction).You need to review 3500.5. Construction loans are not automatically exempt from RESPA. For example if you may do the permanent financing, or if the lot is purchased with part of the loan proceeds then the loan is subject to RESPA and the requirements of 226.19(a) kick in.

First published on BankersOnline.com 2/01/10