We are currently doing mortgage modifications and I've been asked to make sure they are true modifications and exceptions to the definition of a refinance. For fixed rate loans, the interest rate and corresponding monthly payment is lowered and the term and maturity date remain the same. A loan modification agreement is signed by the borrower. The agreement references the terms of the original note, and notes the change in rate and payment.
We are also doing this with adjustable rate loans. The result is the same; the rate and payment are lowered and disclosed in the loan modification agreement. The adjustable rate change date is reset in this agreement. For example, if the borrower's original loan is a 5/1 ARM originated in 2018 with the first rate change date to be in 2023, the modification agreement would state the new rate and payment, with the new rate change date in 2026, as the 5/1 ARM modification changes this. The amortization is the same, with the original expected maturity date of the loan. We provide ARM disclosures. Is this all that is necessary, or would the ARM change make this a refinance requiring further disclosures?