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#2194720 - 10/04/18 06:25 PM New Money - and Promissory Note
Cat Lover Offline
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Joined: Jun 2016
Posts: 147
We have a construction perm loan for which the customer came back to request an additional $200,000 in order to finish construction. We took a new promissory note (PN)entitled "Modification of Promissory Note" for the full amount of the loan including the new money. Also, in the verbiage included in the new PN it states that:
[i][/i] Maker has requested an increase to the loan amount and to otherwise modify the terms of the Loan, subject to the terms and conditions set forth herein, which shall control over any terms of the Note, which conflict with the terms of this Note"

Would you consider the PN is replacing the previous PN? We also disbursed new money, is it HMDA reportable

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#2194732 - 10/04/18 07:02 PM Re: New Money - and Promissory Note Cat Lover
RR Joker Offline
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RR Joker
Joined: Nov 2002
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The Swamp
It's still a construction loan and assuming it will be paid by other long term financing, it won't be reportable. If it's a true modification, which it 'sounds' like...it also wouldn't be reportable.
Last edited by RR Joker; 10/04/18 07:03 PM.
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#2194740 - 10/04/18 07:37 PM Re: New Money - and Promissory Note Cat Lover
Cat Lover Offline
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Joined: Jun 2016
Posts: 147
In this case the loan is a construction permanent loan, and the wording they placed on the new promissory note that was issued, sounds like it replaces the previous promissory note.

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#2194743 - 10/04/18 07:42 PM Re: New Money - and Promissory Note Cat Lover
rlcarey Offline
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rlcarey
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Galveston, TX
Only your legal counsel is going to be able to answer the question as to whether it replaces the existing obligation.
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#2194836 - 10/05/18 06:32 PM Re: New Money - and Promissory Note Cat Lover
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Agree with Randy, but I'm a bit confused. It 'sounds' like you 'modified' the PN on the original construction loan to give more money on a 'continues to be' construction loan...not a permanent loan/phase/whatever. If it has not morphed into the permanent phase yet, I would still contend it is not reportable regardless of how you handled it [mod/new note/whatever]
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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