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#2281456 - 02/23/23 02:44 PM Introductory Rate Period
L. Finley Offline
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Joined: Feb 2023
Posts: 4
Hello,
I am working on a file where the loan was approved as a variable rate adjusting every 3 years, however the loan was documented with a fixed rate instead. Our doc team prepared a Change in Terms Agreement to modify and correct the interest rate from fixed to variable (effective two months later). For HMDA reporting, would I need to report the introductory rate period as "NA" since that is how it was prepared on the Note as of the closing date, or should I report "36 months" to match the approved rate that it was modified to?

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#2281472 - 02/23/23 05:23 PM Re: Introductory Rate Period L. Finley
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Modifications are not reportable. You report what it was at origination. You actually got the borrower to sign such a modification? I would have not.
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#2281478 - 02/23/23 05:36 PM Re: Introductory Rate Period rlcarey
L. Finley Offline
New Poster
Joined: Feb 2023
Posts: 4
Thank you and very true about the rate considering how frequently the WSJ has increased.

In this case, the loan was originally approved with a variable rate and the CIT was done completed to correct our mistake. Would it still be considered a modification?

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#2281479 - 02/23/23 05:41 PM Re: Introductory Rate Period L. Finley
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
The only way to change the legal obligation on a closed-end loan is for the borrower to sign a modification. If I got a good starting rate in this market, why would I agree to turn that into a variable rate loan. Whether or not this involved a bank error is not relevant. If you somehow coerced the borrower to sign something that was not to their benefit by claiming bank error, then you are staring at a UDAP.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2281637 - 02/27/23 09:25 PM Re: Introductory Rate Period L. Finley
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Adding a previously undisclosed variable rate feature made your "modification" a refinancing under 1026.20(a). New complete set of disclosures (starting with the LE) and check all of the potentially applicable of Reg Z.
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John S. Burnett
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