An interim construction loan went bad because a builder failed (not so much as even laid a foundation) & bailed. As such, the FI providing the perm has backed out. So now, the note has matured and the borrowers (and loan officer) simply want to "modify" the original loan (variable rate, interest only) to make it a fixed term (still a variable rate) in order to sell the property/land...as no dwelling was ever constructed.
First, could this even be considered a modification, especially after maturity? Or, is it most definitely a refi?
Second, although the original purpose was to provide financing to construct (and another FI provide permanent financing) a personal home, since the borrowers now just "want out," can they claim this was a business investment?
Bottom line: Reg Z applies, correct?
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"Remember no man is a failure who has friends." - Clarence (the Angel) Oddbody - It's a Wonderful Life