My collections person is attempting to "work out" a Loan (actually) two for a client who is having trouble keeping up with their payments. Our question is would we be required to redisclose anything in this situtation:

Client (consumer) has two closed end loans with the bank. We hold both a 1st lien and 2nd lien against the property. What we would like to do is modify the 1st loan for amount, interest rate, and term. The increased amount would be used to satisfy the 2nd loan (and lien). This would all be done without underwriting. Basically I think what they are trying to do is consolidate the two amounts, reduce rate, increase the term which ulimately means a reduced payment amount to the client that they can handle.

Would this qualify the work out as a true modification of the 1st loan? What would we need to redisclose? What would the right to rescind amount be, if any? What about HMDA implications?

Any help would be appreciated!

Paragraph 20(a)(4).

1. Workout agreements. A workout agreement is not a refinancing unless the annual percentage rate is increased or additional credit is advanced beyond amounts already accrued plus insurance premiums

This is exactly what I needed! Refinance it is! Thanks.