As shown in the table below, conversion tolerances can be applied if the interest rate or loan amount has been changed. (All other changes need to be rewritten.) When a limited cash refinancing transaction is used, the borrower must have complied legally with the lot before receiving the first advance of the interim financing of the construction. The borrower uses the proceeds of construction financing to pay the existing pledge fees on the land and finance the construction of the property. This type of transaction is not a "real" limited refinancing, in which the borrower refinances a loan used to purchase a completed property; However, all other requirements apply to limited cash refinancing. See B2-1.3-02, Limited Cash-Out Refinancing Transactions and Limited Refinancing Requirements for Cash Distributions in B5-2-03, Manufactured Housing Underwriting Requirements. Note: The initial construction credit amount and the modified final amount of the loan notified to Fannie Mae must meet the current credit limits. For all individual closing transactions, the construction loan must be structured as a temporary loan, exempt from the repayment obligation under Regulation Z. The duration of the construction credit for single-cycle construction operations must not exceed 12 months and the total duration must not exceed 18 months. Lenders may provide, if necessary for completion of the work, an extension of the initial period to a total of 18 months, but the documents must not indicate an initial construction period or a subsequent extension of more than 12 months. After the transition to sustainable financing, the loan must have a maximum term of 30 years (excluding the construction period). The lender must include the corresponding conversion document in its loan application package. When modified building credit driver documents are registered, the lender must also contain a copy of the original documentation signed by the borrower. When a purchase transaction is used, the borrower does not own the land at the time of the first advance of the interim financing of the construction, and the borrower uses the proceeds of the intermediate financing to acquire the land and finance the construction of the property.
The lender must take out a permanent individual loan on the basis of the terms of the permanent financing. If the permanent financing conditions are changed and no longer reflect the conditions on which the underwriting was based, the loan must be rewritten within certain refinancing tolerances. Loan data on delivery must match the final transmission of the credit report to the DU. Instead of securing a construction credit and then taking out a fixed-term mortgage after construction is completed, a construction conversion mortgage finances the construction and then turns into a permanent mortgage.