Skip to content
BOL Conferences
Thread Options
#1976004 - 11/13/14 03:25 PM Reamortize to lower payment-Consumer Loan
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,107
In the mountains
A consumer balloon real estate secured loan originated 5.10.2013, will mature 5.5.2018. At origination the loan amount was $258,000, term was 30/5. On 7.25.13, the customer put $128,000 down on the principal balance. The current balance is $115,000. The customer is requesting to lower the payment based on the remaining amortization/term (342/42).

Can this be done without refinancing the loan? If so, what do we need to execute this change?
_________________________
Always learning something new...

Return to Top
Lending Compliance
#1976112 - 11/13/14 05:06 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Under federal laws (TIL, RESPA, HMDA), you could modify the loan without refinancing it. A refinancing occurs when you satisfy/replace/extinguish a loan with a new loan. If you keep the original loan in place but modify the payment/term, you may not be refinancing it.

To execute this, you prepare a modification agreement that attaches to the original note.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#1976279 - 11/13/14 09:36 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Although it's not likely to be a problem, you should also check your state law. Better still, have an attorney draft the modification agreement.
_________________________
...gone fishing.

Return to Top
#1976283 - 11/13/14 09:44 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,107
In the mountains
Thanks for the responses...we have an attorney working on the note modification agreement for us.
_________________________
Always learning something new...

Return to Top
#2147439 - 09/25/17 05:03 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
ineedhelp Offline
100 Club
Joined: Mar 2014
Posts: 169
We are wanting to help a customer by lowering a rate and re-amortizing her payment via a modification agreement rather than refinancing her loan and causing her to incur fees. Is this ok to do as a modification and not a refinance because the loan will remain same loan number? What if we get a new mortgage because the maturity date of the loan has changed?

Return to Top
#2147447 - 09/25/17 05:11 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Is it OK? You would have to ask legal counsel. If it is, it would not be a refinance under Reg. Z.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2147499 - 09/25/17 08:06 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
ineedhelp Offline
100 Club
Joined: Mar 2014
Posts: 169
Ok. Thanks.

Return to Top
#2147614 - 09/26/17 05:00 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
The maintenance of a loan number is not relevant to the determination of what Regulation Z defines as a "refinancing."

Also, your actual question "is it OK to do as a modification...?" extends beyond Regulation Z. Investors, insurers, guarantors, and any other third party stakeholders may have a say in any changes you make.
_________________________
...gone fishing.

Return to Top

Moderator:  Andy_Z