Q: What construction loans are covered by the TILA-RESPA Rule?
A: Generally, construction loans that are closed-end consumer credit transactions secured by real property or a cooperative unit are subject to the TILA-RESPA Rule. A construction loan that is not a closed-end transaction (is an open-end transaction, such as HELOC), that is not primarily for a personal, family, or household purpose (i.e., is primarily for a business purpose), or that is not extended to a consumer is not subject to the TILA-RESPA Rule. (§§ 1026.3(a) and 19(e)(1)(i)).
For more information on the coverage of the TILA-RESPA Rule, see Section 4, above (in the Bureau’s compliance guide).