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#2210118 - 04/02/19 05:35 PM Recasting a Mortgage Loan
Comprunx3 Offline
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Are there any disclosure requirements when recasting a closed end mortgage loan?

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#2210145 - 04/02/19 07:51 PM Re: Recasting a Mortgage Loan Comprunx3
rlcarey Online
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rlcarey
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Galveston, TX
What do you mean by "recasting" and under what circumstances?
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#2210155 - 04/02/19 08:26 PM Re: Recasting a Mortgage Loan Comprunx3
Comprunx3 Offline
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Joined: Oct 2015
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a lump sum principal reduction was made and the customer wants a payment amount change for the remaining term based on the remaining balance and term.

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#2210165 - 04/02/19 08:59 PM Re: Recasting a Mortgage Loan Comprunx3
John Burnett Offline
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John Burnett
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If you modify the loan to reduce the payments and not change the term, and don't do anything to make the changes a refinancing under §1026.20(a) of Reg Z, you don't have to make any disclosures. I suggest having the modification signed in two copies, one retained by the borrower, one by the bank.
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#2210320 - 04/04/19 01:08 PM Re: Recasting a Mortgage Loan Comprunx3
Comprunx3 Offline
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John - ok to charge a reasonable fee to perform this recast?

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#2210322 - 04/04/19 01:11 PM Re: Recasting a Mortgage Loan Comprunx3
rlcarey Online
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rlcarey
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Galveston, TX
Allowable fees would be a State law issue. But charging a fee will not impact whether or not TRID disclosures are required.
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#2250528 - 03/12/21 11:33 PM Re: Recasting a Mortgage Loan Comprunx3
3rdTurned2nd Offline
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Joined: Nov 2019
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I know this is an old thread, but do you consider mortgage recast requests such as these to be applications under Reg B? As described, they're definitely not refinances, but they are modifications, right? I'm struggling to identify if it's an "app" or not.

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#2250531 - 03/13/21 02:51 PM Re: Recasting a Mortgage Loan Comprunx3
rlcarey Online
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rlcarey
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Posts: 83,226
Galveston, TX
The FRB talked about Reg B and modification in the attached letter. I guess you would have to make the call as to whether it is or is not based on the specific modification request. I am not sure why you would not. But I am also not sure why you would deny such a request if you want to retain the customer.

https://www.federalreserve.gov/boarddocs/CALETTERS/2009/0913/caltr0913.htm
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#2250533 - 03/13/21 09:19 PM Re: Recasting a Mortgage Loan Comprunx3
Richard Insley Offline
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Richard Insley
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Toano, VA
Reg. B's definition of "application for credit" is very broad. I'd lean in the direction that what you describe is an application.

1002.2(f) "Application" means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested.

1002.2(q) "Extend credit" and "extension of credit" mean the granting of credit in any form (including, but not limited to, credit granted in addition to any existing credit or credit limit; credit granted pursuant to an open-end credit plan; the refinancing or other renewal of credit, including the issuance of a new credit card in place of an expiring credit card or in substitution for an existing credit card; the consolidation of two or more obligations; or the continuance of existing credit without any special effort to collect at or after maturity).

1002.2(j) "Credit" means the right granted by a creditor to an applicant to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment therefor.
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