Q: Does the creditor indicate there will be an escrow account in the Projected Payments table for the construction phase?
A: When both phases of a construction-permanent loan are disclosed as one transaction, if there will be an escrow account only during the permanent phase, the creditor discloses “YES” to indicate the estimated taxes, insurance, and assessments will be in escrow, as applicable. (§ 1026.37(c)(4)(iv)). The amounts are calculated based on the creditor’s due diligence to obtain the best information reasonably available at the time of the disclosure is made to the consumer. (Comments 17(c)(2)(i)-1 and 19(e)(1)(i)-2)
When the loan is disclosed as two separate transactions, if an escrow account will be established for the permanent phase, but not the construction phase, the disclosure for the construction phase is “NO” and the disclosure for the permanent phase is “YES.”