We have a customer whose construction loan will soon convert to a 30 year permanent loan. The customer indicates interest in modifying the permanent loan to a 15 year term. We only offer construction/permanent loans with one closing, so closing was last year.

Are we allowed to modify to a 15 year permanent loan? Are new TRID disclosures required or a simple statement of fees?

Thanks!

If your modification does not meet the criteria in section 1026.20 for a refinancing, you can complete it without any requirement for new disclosures, nor would it be subject to other sections of Regulation Z, such as the ATR requirements of section 1026.43.

Follow up question: If it meets the refinancing criteria in the citation provided, does it have to be refinanced, or can it be modified and the customer be given new disclosures?

Thank you!

You could always give more disclosures--if you have a way to calculate them. John's point was that a simple modification does not rise to the level of what Reg. Z calls a "refinancing." Section 1026.20(a) divides these situations into two groups: (1) "refinancings" and (2) anything else. When used in this part of the regulation, a "refinancing" is something very specific. Banks commonly use that term more loosely in the business setting, but for Reg. Z purposes, you must use is as defined in the section cited.