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#1128646 - 02/12/09 03:45 PM refinancing of interest
roper mom Offline
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Joined: Feb 2009
Posts: 7
I have a loan officer that refinanced only the interest from a note (principal has been paid)into a new consumer note and only charged a minimum finance charge but no interest on this new note with monthly payments. Is there a problem here?

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Lending Compliance
#1128684 - 02/12/09 04:02 PM Re: refinancing of interest roper mom
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,396
Galveston, TX
You would have to look at State law if you are allowed to structure a consumer loan in this manner. Makes for an interesting TIL disclosure.
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#1129023 - 02/12/09 07:57 PM Re: refinancing of interest rlcarey
roper mom Offline
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Joined: Feb 2009
Posts: 7
Thank you

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#1129140 - 02/12/09 09:03 PM Re: refinancing of interest roper mom
Rocky P Offline
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Joined: Jun 2003
Posts: 7,659
Florida
A long, long time ago, (1985) the OCC issued Examining Circular EC-229 which had guidelines for Capitalization of Interest on Loans.
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#1129182 - 02/12/09 09:33 PM Re: refinancing of interest Rocky P
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,396
Galveston, TX
Since they completely paid the principal balance, I would have a hard time seeing this as capitalization of interest, unless the interest exceeded the principal balance.
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