CFPB TRID Sec. 14.6 - Is the creditor required to disclose the sale price or appraised value or estimated value for construction loans?

Compliance > Regulation Z - TILA / TRID Specific > General Info
Q:  Is the creditor required to disclose the sale price or appraised value or estimated value for construction loans?
 
A:  The requirement to disclose a sale price or appraised value or estimated value if loan proceeds are used to finance construction costs depends upon:
  • Whether the transaction involves a seller, and
  • Whether the sale price is known at the time the disclosure is made.
 
In transactions where there is a seller, the creditor is required to disclose the contract sale price of the property. (§§ 1026.37(a)(7)(i) and 1026.38(a)(3)(vii)(A)). For the Loan Estimate, if the sale price is not yet known, the creditor may disclose the estimated or appraised value of the property that it used as the basis for the disclosures in the Loan Estimate. (Comment 37(a)(7)-1)
 
In transactions without a seller, the creditor discloses the appraised value if the creditor has obtained an appraisal or valuation of the property, or the estimated value of the property if there is no appraisal or valuation of the property. (§§ 1026.37(a)(7)(ii) and 1026.38(a)(3)(vii)(B); Comments 37(a)(7)-1 and 38(a)(3)(vii)-1)
 
When disclosing an estimated or appraised value on the Loan Estimate: the creditor may, at its option, include the value of improvements to be made on the property. (Comment 37(a)(7)-1)
 
When disclosing an estimated or appraised value on the Closing Disclosure: the creditor must disclose the value of the property used to determine the approval of the credit transaction, including the value of the improvements to be made on the property, if the value of those improvements were used in determining the approval of the credit transaction. (Comment 38(a)(3)(vii)-1)
 
Absent its own estimate, the creditor may use an estimate provided by the consumer at application. (Comment 37(a)(7)-1 and 38(a)(3)(vii)-1)
 
 
This information can be found in the CFPB's TILA-RESPA Integrated Disclosure rule compliance guide - http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 

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