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#2210037 - 04/01/19 09:18 PM Private Education Loans
banker-12 Offline
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Joined: May 2007
Posts: 1,180
We only have two loans that were made for the purpose of education expense prior to the implementation of the rule. We have been doing modifications to extend the maturity. One of the loans is a variable rate loan, the terms have not changed since origination; however, this time the APR is greater than the original APR by more than the .125% threshold (the interest rate has increased).

Does the section 1026.20(a)(3) Variable Rate apply to non-real estate variable loans? is it okay to just modify it without triggering the disclosure requirements if the original note disclosed the variable rate features? It's not an ARM loan.

Thanks,

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#2210038 - 04/01/19 09:38 PM Re: Private Education Loans banker-12
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 76,990
Galveston, TX
If you are extending the loan and not changing what the interest rate is based on (index and margin) you are not adding or changing a variable rate feature unless you are doing something more than extending the maturity date.
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#2210042 - 04/01/19 11:20 PM Re: Private Education Loans banker-12
banker-12 Offline
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Joined: May 2007
Posts: 1,180
The interest rate is still based on the original index and margin. The only change was to the maturity period from one year (4 quarterly int. only pmts.) to six months (2 quarterly int. only pmts.). The loan now matures every six months. this should also not trigger the disclosures, correct?

Thank You.

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#2210052 - 04/02/19 11:29 AM Re: Private Education Loans banker-12
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 76,990
Galveston, TX
Correct, but why the heck would you manage a loan in this manner. Term it out and be done with it. Why play around with it every 6 months?? The cost alone of all these renewals probably makes the loan unprofitable.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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