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#1888268 - 01/17/14 09:14 PM Re: Refinance or renewal? HuntFish
dblack Offline
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Joined: Feb 2008
Posts: 263
AL
Great discussion in here.

I wish I would have searched the FDIC manual for this long ago.

It would have been much easier than arguing using language from the preamble to a proposed rule that never was implemented. smile

http://www.federalreserve.gov/reportforms/formsreview/REGZ(R1390)_20100924_ifr.pdf

"To avoid long-term interest rate risk, some creditors that hold loans in portfolio will structure mortgage transactions as short term balloon loans, which they modify shortly before the balloon comes due on the note. The modification may include an increase in the consumer’s interest rate, but may not be a refinancing under current Regulation Z. Some creditors may provide TILA disclosures in these circumstances, but they need not do so,
and the protections in § 226.35 for higher-priced mortgage loans do not apply."
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#1888273 - 01/17/14 09:19 PM Re: Refinance or renewal? HuntFish
RR Joker Offline
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The Swamp
I'm not sure why in the world I never stumbled upon it in the FDIC compliance manual either! crazy
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#2006052 - 04/03/15 01:52 PM Re: Refinance or renewal? HuntFish
newyork Offline
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Joined: Aug 2008
Posts: 415
Hello:
I am looking for guidance on the refinance definition. We do not offer any Variable Rates on the RE Loans. They are all fixed. They are balloons and they mature. At maturity, the rate may be increased, depending on their payment history. We prepare a modification with new terms and a HIGHER rate. Is this a refinance? There was never VR language because we do not offer that product. Only fixed rates. Please help. Really appreciate it.

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#2006054 - 04/03/15 01:57 PM Re: Refinance or renewal? HuntFish
John Burnett Offline
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John Burnett
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Cape Cod
You're in the right place, newyork. Just scroll back to the beginning of this thread and read it. Your answers are there.
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#2006169 - 04/03/15 06:54 PM Re: Refinance or renewal? HuntFish
RR Joker Offline
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The Swamp
That and be careful of "at maturity". Once matured all you probably have (legal question, however, so discuss with counsel in your state)is a defaulted loan which can't be 'modified'.
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#2006486 - 04/07/15 12:58 AM Can we modify a loan to add credit insurance? HuntFish
c@c Offline
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Posts: 113
Georgia
Post consummation the borrower has requested to add credit life to their non-real estate loan. This request may or may not increase the original loan amount depending on whether or not the borrower has made payments on the loan.

In reviewing Reg Z 1026.20 under for post consummation events, the definition of "refinance" leaves me a little fuzzy on whether or not this can be completed with a modification agreement vs. a requirement to actually redisclose as a new transaction. Any words of wisdom on whether or not we can simply modify the loan to accomplish the adding of credit life to the transaction?

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#2006493 - 04/07/15 03:25 AM Re: Can we modify a loan to add credit insurance? c@c
Richard Insley Offline
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Richard Insley
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Toano, VA
Originally Posted By c@c
whether or not we can simply modify the loan to accomplish the adding of credit life to the transaction?
Add anything you want (except a VR feature)--the answer's still the same.

See above:
Originally Posted By Richard Insley
Please note, however, that an increase in the interest rate and all the downstream numbers is not part of the test for renewal vs. refinancing. It is based on one of two events:
1. satisfaction of the old note and replacement with a new note, or
2. addition of a variable rate feature.
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