Review of a “sandbox application” about consumer disclosures of a loan that finances both a construction phase and the permanent purchase of a home is in the final stages by the federal consumer financial protection agency, it said in a notice Tuesday.
The Consumer Financial Protection Bureau (CFPB) said the review is of an application by a banking trade group (the Independent Community Bankers of America [ICBA]) which contends that “it is not uncommon in rural communities for first-time homebuyers to build their first home because there are limited existing affordable ‘starter’ homes,” the CFPB said. The application, the CFPB said, seeks to adjust the existing mortgage disclosures to facilitate the offering of the two loans.
The trade group, the CFPB said, “believes that consumer understanding of construction loans would be improved by disclosures that are specifically tailored to such loans.”
The bureau said that if the application is approved, it could serve as a template that individual lenders can then apply to enroll in an in-market testing pilot.
Public comment is being sought by the agency on the application, particularly those with construction lending experience. Comments are due March 29, the CFPB said.
Seeking public input: new proposal for alternative mortgage disclosures for construction loans