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#2269835 - 04/29/22 05:24 PM TRID-Renewal vs. Refinance
Anonymous Offline
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Joined: Jun 2021
Posts: 187
1.If we are "renewing" the loan from a 5 year balloon to a 15 year fixed would this still be considered a renewal and therefore LE/CD would not be needed?

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General Discussion
#2269837 - 04/29/22 05:51 PM Re: TRID-Renewal vs. Refinance Anonymous
rlcarey Online
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rlcarey
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Galveston, TX
Renewal is not defined in Regulation Z. You need to determine whether or not the action falls within the definition of a refinance under 1026.20(a). Is the original obligation being satisfied or extinguished and replaced by a new obligation, based on the parties' contract and applicable law?
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#2269841 - 04/29/22 06:33 PM Re: TRID-Renewal vs. Refinance Anonymous
Anonymous Offline
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Posts: 187
We are "renewing" the loan but rather that keep the balloon payment schedule we are changing the terms to 15 year fixed. The loan number will stay the same and we will stamp renewed. I am torn because the "terms" are changing but the original obligation is not really satisfied or being extinguished, just changed.

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#2269844 - 04/29/22 06:37 PM Re: TRID-Renewal vs. Refinance Anonymous
rlcarey Online
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rlcarey
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Galveston, TX
Like I said - the term "renewed or renewing" is an internal term and is not a term defined within Regulation Z. If you are not extinguishing and replacing the original obligation under State law, then unless you are adding or changing a variable rate feature, it is not going to be a refinance under 10266.20(a).
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#2269845 - 04/29/22 06:39 PM Re: TRID-Renewal vs. Refinance Anonymous
Anonymous Offline
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Posts: 187
Can you explain what they mean by variable rate feature?

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#2269846 - 04/29/22 06:42 PM Re: TRID-Renewal vs. Refinance Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
Refer to Paragraph 19(b)(2) - Comment 2.
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#2269848 - 04/29/22 06:52 PM Re: TRID-Renewal vs. Refinance Anonymous
Anonymous Offline
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Joined: Jun 2021
Posts: 187
Thanks, so the idea that we are going from a balloon payment to a 15 year fixed does not really matter. I would have thought for sure that would trigger new disclosures.

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#2269913 - 05/02/22 05:07 PM Re: TRID-Renewal vs. Refinance Anonymous
RVFlyboy Offline
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Soaring over Georgia
You probably need to have a conversation with your legal counsel to make the determination on whether your process and documentation constitute a "satisfaction and replacement" or not. If it constitutes a "satisfaction and replacement", then it will be a refinance under 1026.20 and will require new disclosures. Keep in mind UDAAP too - even if Reg Z does not technically require new disclosures, can a case be made that the consumer did not get important information to make an informed decision?
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