**
Appendix D to Part 1026—Multiple Advance Construction Loans
**

Section 1026.17(c)(6) permits creditors to treat multiple advance
loans to finance construction of a dwelling that may be permanently
financed by the same creditor either as a single transaction or as more
than one transaction. If the actual schedule of advances is not known,
the following methods may be used to estimate the interest portion of
the finance charge and the annual percentage rate and to make
disclosures. If the creditor chooses to disclose the construction phase
separately, whether interest is payable periodically or at the end of
construction, part I may be used. If the creditor chooses to disclose
the construction and the permanent financing as one transaction, part
II may be used.

*Part I--Construction Period Disclosed Separately*

A. If interest is payable only on the amount actually advanced for
the time it is outstanding:

1. Estimated interest--Assume that one-half of the commitment
amount is outstanding at the contract interest rate for the entire
construction period.

2. Estimated annual percentage rate--Assume a single payment loan
that matures at the end of the construction period. The finance charge
is the sum of the estimated interest and any prepaid finance charge.
The amount financed for computation purposes is determined by
subtracting any prepaid finance charge from one-half of the commitment
amount.

3. Repayment schedule--The number and amounts of any interest
payments may be omitted in disclosing the payment schedule under
§ 1026.18(g). The fact that interest payments are required and the
timing of such payments shall be disclosed.

4. Amount financed--The amount financed for disclosure purposes is
the entire commitment amount less any prepaid finance charge.

B. If interest is payable on the entire commitment amount without
regard to the dates or amounts of actual disbursement:

1. Estimated interest--Assume that the entire commitment amount is
outstanding at the contract interest rate for the entire construction
period.

2. Estimated annual percentage rate--Assume a single payment loan
that matures at the end of the construction period. The finance charge
is the sum of the estimated interest and any prepaid finance charge.
The amount financed for computation purposes is determined by
subtracting any prepaid finance charge from one-half of the commitment
amount.

3. Repayment schedule--Interest payments shall be disclosed in
making the repayment schedule disclosure under § 1026.18(g).