I have a borrower who currently has a $25,000.00 second mortgage. They would like to increase to $60,000.00. They are trying to do it as a modification, but I did not think it is possible as it would take the new balance over the original amount. I am thinking this needs to be a new loan, complete with TRID disclosures. Any input would be appreciated.

This is the story of our lives, helping lenders make things easier and less expensive on their borrowers, and maintaining the lien position for the bank. This is foremost in their minds. Compliance in yours. The two do not go together as easily as they once did and outstanding customer service no longer equates to compliance.

Is it the same program, same payment methods and perhaps the same rate? Are there any fees associated? What is the date of application for the original loan? (If you are going to modify, you need to know what rules to follow.) What does your attorney say?

Depending on when the original application was taken, and your answers to the above questions, do a modification of note, new TIL or CD showing the new payments, rescission on the new money and a modification of mortgage. (If in a flood zone, you might need to do more!) As always, we recommend a new loan, they're cleaner, (that's what we call them anyway), but if your attorney signs off, what are the risks? Your customer will be helped, you spent less time helping them, $60,000 grand is chump change, likely to not be viewed by an examiner, especially if the application date is a while ago and/or they have already reviewed that loan number. And your lender will think you're actually there to help them comply, not just to tell them "no" all the time.

Hope that helps.

Just to add on, since this is a MIRE event you'll need to pull a new flood determination as well unless your current one meets the three exceptions.

We are a small community bank $242K so we do not have the luxury of an attorney to check with. Same loan type, original date is 2/15, loan was for 72 months. Yes there will be fees. So you are saying do a closing disclosure, even though they did not do a loan estimate?

Yes, you already gave them a Loan Estimate, 3 days after application.

My small banks don't really have that luxury either, but they each have gotten definitive opinions about modifying notes and mortgages, which gives them a certain comfort for future requests.

They did not give a loan estimate because it was a modification. That is what I am being told.

No, I mean 3 days after they originally applied for the loan, February 2015.

I don't think y'all are on the same page.

It sounds to me like this is an exiting booked loan. Rather than go through an entire refinance, the LO want's to modify with new money.

I don't get itchy with these on commercial deals, but do get a bit itchy with consumer, even with giving ROR, of course. Especially for that large of a difference. [there is no such thing as 'chump change' on consumer loans where examiner's are concerned]

JWills, without an attorney to consult, I would not risk it. Your state may prohibit such a transaction. The regulation, as far as I know it, does not strictly prohibit anything other than adding a VR feature...so beyond that...it's a state conundrum...at least to my best knowledge.

I agree with RR Joker. There is just too much at risk.

JWills, a good starting point is 1026.20(a) Refinancings.