Skip to content
BOL Conferences
Page 2 of 2 1 2
Thread Options
#1888268 - 01/17/14 09:14 PM Re: Refinance or renewal? HuntFish
dblack Offline
Gold Star
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."
_________________________


CRCM



Return to Top
Lending Compliance
#1888273 - 01/17/14 09:19 PM Re: Refinance or renewal? HuntFish
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
I'm not sure why in the world I never stumbled upon it in the FDIC compliance manual either! crazy
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#2006052 - 04/03/15 01:52 PM Re: Refinance or renewal? HuntFish
newyork Offline
Gold Star
Joined: Aug 2008
Posts: 447
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.

Return to Top
#2006054 - 04/03/15 01:57 PM Re: Refinance or renewal? HuntFish
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
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.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2006169 - 04/03/15 06:54 PM Re: Refinance or renewal? HuntFish
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
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'.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#2006486 - 04/07/15 12:58 AM Can we modify a loan to add credit insurance? HuntFish
c@c Offline
100 Club
Joined: Mar 2008
Posts: 120
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?

Return to Top
#2006493 - 04/07/15 03:25 AM Re: Can we modify a loan to add credit insurance? c@c
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
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.
_________________________
...gone fishing.

Return to Top
Page 2 of 2 1 2

Moderator:  Andy_Z