I'm stumped.
We want to convert a HELOC from an open-end to closed-end transaction. I've read many times here that in order to do so you must refinance, not modify, but I'm not finding a reference to this idea in Reg Z.
I found this commentary to 1026.17(b)(2), but it doesn't specifically state that the note must be satisfied and replaced with a new note. Sorry, I'm dense. Help!!
2. Converting open-end to closed-end credit. Except for home equity plans subject to §1026.40 in which the agreement provides for a repayment phase, if an open-end credit account is converted to a closed-end transaction under a written agreement with the consumer, the creditor must provide a set of closed-end credit disclosures before consummation of the closed-end transaction. (See the commentary to §1026.19(b) for the timing rules for additional disclosures required upon the conversion to a variable-rate transaction secured by a consumer's principal dwelling with a term greater than one year.) If consummation of the closed-end transaction occurs at the same time as the consumer enters into the open-end agreement, the closed-end credit disclosures may be given at the time of conversion. If disclosures are delayed until conversion and the closed-end transaction has a variable-rate feature, disclosures should be based on the rate in effect at the time of conversion. (See the commentary to §1026.5 regarding conversion of closed-end to open-end credit.)