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#1976004 - 11/13/14 03:25 PM Reamortize to lower payment-Consumer Loan
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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?
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#1976112 - 11/13/14 05:06 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
David Dickinson Offline
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David Dickinson
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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.
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#1976279 - 11/13/14 09:36 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
Richard Insley Offline
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Richard Insley
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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.
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#1976283 - 11/13/14 09:44 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
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In the mountains
Thanks for the responses...we have an attorney working on the note modification agreement for us.
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#2147439 - 09/25/17 05:03 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
ineedhelp Offline
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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?

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#2147447 - 09/25/17 05:11 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
rlcarey Online
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rlcarey
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Galveston, TX
Is it OK? You would have to ask legal counsel. If it is, it would not be a refinance under Reg. Z.
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#2147499 - 09/25/17 08:06 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
ineedhelp Offline
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Ok. Thanks.

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#2147614 - 09/26/17 05:00 PM Re: Reamortize to lower payment-Consumer Loan Likes to Comply
Richard Insley Offline
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Richard Insley
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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.
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