Multiple-advance term loan for interim construction purpose to a consumer. They were approved on their cost-to-build which included a basement. Loan has closed and first draw has been processed. Customer has now revised their cost-to-build eliminating the basement and loan officer would like to decrease their commitment & availability amount. Original loan amount included the approval of the plans w/basement. Can we prepare a modification agreement to decrease the loan amount (all other terms and conditions of the loan remain the same). I want to make sure that we wouldn't have to pay off this loan and re-disclose for the new lower amount and a modification (change in terms agreement) is acceptable in this scenario. My suggestion to the officer is to leave the loan as is with no modification agreement; if they don't advance, no harm/no foul. Thanks!
Modification is possible without re-disclosure. The impact on your title insurance and other consideration would be a question for your attorney. Just not advancing the funds is probably the most painless road to take.
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Loan officer & Credit Admin are going to discuss this today. On the loan doc side, we won't do anything; from the credit side.....document, document, document!