Modification to Construction Loan Agreement by jba60919


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									This is not a Loan Commitment. This is a General Disclosure of the One Time Close Construction
Loan Program.
                                Fixed Rate - One Time Close

San Antonio Federal Credit Union (“Lender”) offers construction rollover financing which provides for conversion from
construction phase financing to permanent mortgage financing. This program requires only one loan closing and one set of
legal documents unless changes in loan terms or failure to timely complete construction necessitate the preparation of a
Modification Agreement which sets out the modified loan terms. On the designated Rollover Date, assuming all requirements
have been met, the loan converts to a Permanent Loan.

This Disclosure is for reference purposes only and in intended to help you understand the features of the Construction Rollover
Program. THIS IS NOT A COMMITMENT BY LENDER TO YOU. If your loan application is approved and your builder is
accepted and all other conditions of Lender are met, Lender will agree to make a construction rollover loan to you (the “Loan”).
Please note that Lender’s acceptance of your builder should not be construed as Lender’s endorsement of your builder
or any representation or warranty by Lender that your builder is qualified to perform the required construction.
Selection of your builder is solely your responsibility and Lender disclaims any liability in connection with your
builder’s performance. You, your builder, and Lender will be bound by the terms of the Loan Documents you sign at the time
of closing (the “Loan Documents”) and by the disbursement schedule. In the event any terms or provision of this
Construction Rollover Disclosure conflicts with the Loan Documents, the terms and provisions of the Loan Documents
shall control. All fees and discounts points are considered earned when paid at closing, even if you decide to pay off the loan
before it converts to the Permanent Loan, as defined below.


             A.   Loan Term

                  The term of the Loan will be the combined lengths of the Construction Period and Permanent Loan, both as
                  defined below.

             B.   Construction Period

                  The Construction Period begins on the day your Note is dated: however, any site work, construction on your
                  Property or delivery of materials to your Property may not begin until the title company has filed all necessary
                  documents and authorized the commencement of construction. The length of the Construction Period will
                  vary but should not exceed twelve (12) months. After the Construction Period ends, your Permanent Loan
                  will begin. During the Construction Period your monthly payments will consist of interest on the outstanding
                  principal balance only. In addition, Lender shall retain 10% of the loan amount available for construction from
                  the final constructions draw (“retainage”), which will be withheld from your builder for 31 days after your house
                  is completed or as outlined in Section, III G of this document.

             C.   Rollover Date

                  The Rollover Date is month prior to the first payment date set out in the Permanent Loan. On the Rollover
                  Date, if the loan terms have changed from your Loan Documents, a Modification Agreement will be

             D. Permanent Loan

                  The Permanent Loan begins on the Rollover Date. All Pre-Rollover Requirements set out below must be
                  satisfied before the Construction Period loan will convert to the Permanent Loan.

             E.   Closing Agent

                  The title company will be the Closing Agent for this Construction Rollover Loan. The closing occurs when
                  you execute the Loan Documents and other closing documents.

             F.   Completion Date

                  Construction shall be deemed completed upon completion of all improvements, satisfactory final inspection by
                  Lender and you, and the execution by Builder and you of an Affidavit of Completion. For purposes of this
                  transaction, the scheduled completion date is at least one month prior to the first payment date set out in the
                  Permanent Loan.

      G. Payment Terms

      1.   Construction Period. During the Construction Period, interest on the unpaid principal balance of the Note
           outstanding from time to time shall be calculated from the date of which the Lender commences funding under
           the Note, and ending on the Rollover Date.

           Interest only shall be payable monthly in arrears beginning on the first day of the month following the Note
           date and monthly thereafter until the Rollover Date, when the last payment of interest only shall be due and

           During the Construction Period, interest on the Note shall accrue and be calculated on a 365 day annual
           basis that computes a daily amount of interest for a 365 day year, then multiplies such amount by the actual
           number of days in each interest calculation period.

      2.   Permanent Loan. Beginning one month after the Rollover Date, monthly payments of principal and interest
           that represent the Loan amount amortized over the Permanent Loan term at the established interest rate will
           be required; in addition, if required by Lender, each month you will pay one-twelfth (1/12th) of estimated annual
           real estate taxes, hazard insurance, and other required escrow items. The interest rate for the Permanent
           Loan will be established thirty (30) days prior to the Rollover Date and will be the lesser of (i) the rate
           established by Lender as its rate offered on such date for mortgage loans with terms comparable to those
           contained in the Note (the “Chosen Rate”) taking any and all previously paid fees and/or discount points paid,
           into account or (ii) the interest rate stated in the Note (the “Ceiling Rate”). The Ceiling Rate will be the
           maximum rate possible for the Permanent Loan, provided construction has been completed as of the
           Rollover Date. If the Chosen Rate established thirty (30) days prior to the Rollover Date is less than the
           Ceiling Rate, you will be required to execute a Modification Agreement (the “Modification Agreement”).

           Early Completion of Construction. In the event the construction described in the Loan Documents is
           completed earlier than scheduled, upon your request, Lender may, at its sole option, permit an earlier rollover
           into the Permanent Loan and a Modification Agreement will be executed. You must notify Lender in writing
           thirty (30) days prior to early completion. The interest rate on the Modification Agreement shall be the lesser
           of the Ceiling Rate or the Chosen Rate as of the date Lender receives such thirty (30) day advance written
           notice from you of early completion. In the event you do not give Lender such thirty (30) day advance written
           notice of early completion, then the interest rate for the Permanent Loan shall be the lesser of the Ceiling
           Rate or the Chosen Rate established by Lender thirty (30) days prior to the Rollover Date.

           Failure to Complete Construction on or before Rollover Date: In the event construction is not completed
           by the Rollover Date, the then outstanding principal balance of the loan, together with any accrued interest,
           may be immediately due and payable, at Lender’s option: however, if Lender approves, the Loan may be
           modified to allow for an extension of the Rollover Date. In the event Lender allows an extension, you must
           pay an extension fee equal to one-half percent (.50%) of the Loan amount, as well as all costs and expenses
           associated with the extension. The new interest rate on the Permanent Loan shall be the greater of the
           Ceiling Rate or Lender’s Chosen Rate established thirty (30) days prior to the extended Rollover Date. In
           addition, Lender will also require you to execute and Extension Agreement and to execute and provide any
           other documents Lender deems necessary.

      H.   Your Equity

           Based on the required loan to value ratio determined by Lender prior to closing, your equity in the project,
           exclusive of any loan proceeds, must already be in the project or placed with Lender, before Lender shall have
           any obligation to fund any portion of the Loan for the construction of the improvements. Further, Lender’s
           loan to value requirements must continue to be met and/or maintained throughout the entire construction
           phase of the Loan.


      You may be required to provide to Lender, or as the case may be, pay for all or part of the following items. There
      may be other items required on a case by case basis, as Lender may deem necessary.

      A.   Pre-Closing Requirements for You.

           1.       Appraisal and Credit Report.

           2.       One copy of the plans and specifications.

                  3.       Satisfactory permanent loan approval by Lender with appropriate conditions met.

                  4.       A copy of the executed construction contract, the terms of which are acceptable to Lender.

                  5.       Detailed cost estimate acceptable to Lender.

                  6.       Information from builder deemed necessary by Lender for review and for approval of your loan.

                  7.       A casualty insurance policy having a “Best’s Key Rating Guide” Class VII Financial Category rating of
                           A, with respect to the Property from an insurer acceptable to Lender, which policy must be in the form
                           of an “all risk” policy with fire, extended coverage, builder’s risk ad vandalism and malicious mischief
                           insurance coverage, and such other extended coverage as may be required by Lender. The casualty
                           insurance policy must be in an amount equal to or greater than the loan amount (but not to exceed
                           the full replacement cost of the improvements) and contain a mortgagee endorsement satisfactory in
                           all respects to Lender. Consult with your insurance agent to verify that the insurance policy
                           you purchase fully protects your interests in the Property.

                  8.       Copy of a general liability policy relating to the Property.

                  9.       A boundary survey of the Property conducted by a surveyor acceptable to Lender and in the form
                           and with all certifications required by the Lender.

                  10.      Copy of any recorded declarations or restrictive covenants and evidence satisfactory to Lender of
                           compliance therewith.

                  11.      Architectural control committee approval (if applicable).

                  12.      Permits of any wells or on-site septic or sewer systems (if applicable).

                  13.      Certification that the Property is not located in a flood zone. If the Property is located in a flood zone,
                           Lender will require a slab survey.

Upon approval and completion of all closing conditions to Lender’s satisfaction, Lender will instruct its counsel to draw the Loan
Documents in Lender’s name. The closing agent will coordinate the closing with you and your builder.

         B.       Closing Requirements for You.

                  1.       A fully paid mortgagee policy of title insurance from a title insurer acceptable to Lender insuring
                           Lender as the holder of a valid first lien mortgage on the Property.

                  2.       Any and all costs associated with closing.

                  3.       Flood Insurance Policy if required (at slab pour).

                  4.       Fully executed Construction Rollover Disclosure.

                  5.       Satisfaction of any other closing requirements set out in Lender’s loan closing instructions.

         C.       Pre-Rollover Requirements.

                  1.       Final inspection of the Property with photographs indicating full completion of the construction.

                  2.       A homeowner’s extended coverage hazard insurance policy in your name from an insurer and in the
                           amount and with such coverage as Lender deems satisfactory. If the Property is located in a
                           federally designated flood plain, a flood insurance policy from an insurer and in the amount and form
                           acceptable to Lender must also be delivered to Lender. You must also provide evidence that you
                           have paid for twelve (12) months coverage under such policy.

                  3.       Evidence of any necessary approvals of any wells or on-site septic or sewer systems.

                  4.       Payment in full of any interest accrued during the Construction Period.

                  5.       A final survey (with any certifications required by Lender) sufficient to delete the standard survey
                           exception from the mortgagee policy of title insurance.

               6.       Affidavits of Completion from any and all contractors, subcontractors, and suppliers, and (if required
                        by Lender) final lien waivers and/or Bills Paid Affidavits.

               7.       Execution of the Modification Agreement or the Extension Agreement (if applicable).

               8.       Compliance with any other reasonable requirement of Lender.

               9.       Any and all costs associated with Rollover including any prepaid escrow items, including mortgage
                        insurance (if applicable).


      A.   Prior to any disbursement, Lender or Lender’s agent will make an inspection of the Property to determine whether
           the work completed is satisfactory to Lender and sufficient to justify the amount of the draw requested. Each draw
           is limited to an amount that corresponds to the percentage or stage completed according to the draw schedule
           provided by Lender. Each inspection will be billed to borrower as and when each inspection is performed and
           included wit the monthly interest billing statement.

      B.   If the Property is determined to be in a flood zone, no loan proceeds (other than lot draw) will be disbursed until
           Lender has received a current slab survey which indicates that no portion of the improvements are located in the
           flood zone.

      C. Lender or its agents shall have the right to inspect all work performed to ascertain compliance with the submitted
         plans and specifications. No substantial deviation from the plans and specifications may be made unless
         expressly approved in advance in writing by Lender.

      D. No advances of the Loan will be made for materials furnished unless such materials are included in the
         construction of the residence, nor will any advances be permitted if any liens are filed against the Property other
         than liens in favor of Lender.

      E.   If you have agreed to have the construction funds wired to the builder’s account or paid directly to the builder, you
           must sign a Disbursement Authorization.

      F. Prior to any disbursements, you must sign the Lender’s draw request form and deliver it to Lender.

      G.   Unless waived in writing by you, the Retainage will be held by the closing agent for at least thirty-one
           (31) days after the Completion Affidavit has been filed in the Real Property Records. After the thirty-one (31) day
           period, if no claims have arisen for unpaid work or materials, the closing agent will pay the Retainage to your


      A. The Loan shall be secured by a first lien mortgage on the Property.

      B.   All applicable loan costs and fees must be paid at the time of closing.

      C.   Construction must commence within fifteen (15) calendar days from the date of closing. NO WORK

      D.   The legal documents you sign establish your rights and duties. If you have any questions or concerns about the
           legal documents, you should consult with your attorney before you sign them.

      I/We acknowledge receipt of the Construction Rollover Disclosure.

      ___________________________________                                   _____________________________________
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