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#2270034 - 05/04/22 04:24 PM Changing Products Headache!
Amanda Offline
New Poster
Joined: Sep 2020
Posts: 8
With the rates going up, we are starting to get requests from customers who wants to convert their HELOC to a fixed rate mortgage. Our Credit Officer thinks we can simply modify the loan and call it a day but I'm thinking we can't modify because the fixed rate mortgage would trigger TRID disclosures and also the HELOC's deed would need to be canceled and do a new deed. How would you handle this situation? Would you recommend them to submit an new application to pay off HELOC with a new mortgage? Or is it really possible to do a modification to change products?? Thanks in advance!

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TRID - TILA/RESPA Integrated Disclosures Rule
#2270062 - 05/04/22 08:22 PM Re: Changing Products Headache! Amanda
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,710
Bloomington, IN
Converting an open-end mortgage to a closed-end mortgage is a refinancing and will require new disclosures.

How you handle the application process is an internal decision as long as the process insures the timing requirement for providing the disclosures are met.

From 1026.40

iii. If the consumer and creditor enter into an agreement during the draw period to repay all or part of the principal balance and the amount of available credit will not be replenished as the principal balance is repaid, the creditor must give closed-end credit disclosures pursuant to subpart C for that new agreement. In such cases, subpart B, including the substantive rules, does not apply to the closed-end credit transaction, although it will continue to apply to any remaining open-end credit available under the plan.
The opinions expressed are mine and they are not to be taken as legal advice.

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