We offer a closed-end personal purpose loan with a variable rate feature and a term of one year or less secured by a principal dwelling. It seems to me that I recall seeing that by simply making a loan payable on demand or for a term of a year or less will not avoid ARM rules if the intent and/or practice is to allow the loan term to extend beyond the year or to be renewed for an additional year on. Would this include refinancing since we would be required to provide new disclosures?

I'm thinking that if we start refinancing them, it may appear that we are structuring these types of loans to evade ARM rules, but can anyone else opine on this?