In looking at the FDIC “Mod in a Box” program, some questions have come up regarding disclosures:

1. The program calls for reducing the rate for 5 years and then increasing by 1% each year until the Freddie Mace Weekly Survey rate at the time of the modification is reached.

Is this adding a variable rate feature that requires a TIL and/or an ARM disclosure?

2. Program permits capitalization of interest and escrows.

Does this trigger Rescission?

3. Program includes a “qualification” process which includes evaluation of the borrowers capacity to repay.

Does this make this an “application” subject to notification requirements of Reg B? This program does not require a credit report as part of the evaluation – if a credit report were obtained, would that make a difference?