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#2254775 - 06/02/21 10:55 PM Consumer Loan s/b Commercial Loan
Multiple Hats Offline
100 Club
Joined: Jul 2008
Posts: 204
This is a new one for me. We made a consumer purpose loan that should have been a commercial purpose loan. The individual is a horse trainer and constructed a barn to run a horse training business out of. Loan is secured by primary residence which will have the barn on the property as well. Customer is now asking for a rate reduction. Considering just doing a modification of the loan reducing the rate without any type of consumer disclosures since we didn't really need to disclose in the first place as opposed to making a new loan that would involve new appraisal/evaluation, title work, filing fees.... Anyone think of a reason not to do it this way?

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Lending Compliance
#2254782 - 06/03/21 12:31 PM Re: Consumer Loan s/b Commercial Loan Multiple Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,632
Galveston, TX
Unless you are changing or adding a variable rate feature, a loan modification is not a refinance under 1026.20(a) unless you are totally replacing the existing obligation, even on a true consumer loan.
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