The bank is considering a program whereby some of their consumer customers will be granted the opportunity to extend their December payment. There will be a list of qualifications the customer must meet to obtain the extension (i.e. non-real estate, must be current).

This offer will be made by mail to those that meet the qualifications and is limited to those loans that will mature within 5 years or less.

The bank also wants to charge a $35 fee for the extension. It already permits extensions under loan policy so I am not sure I see what benefit this will provide the bank by extending a December payment.

Since this will be a "special offering", would this be considered a change in terms for these customers? Thank you.

Customers will jump at the chance to defer their payment, even if it costs them $35.00 - especially around Christmas time. The bank will reap lots of income with these charges.

Generally, the bank will also require the payment of accrued interest.

Yes the bank is concerned about that last payment and I explained that they need to be sure that they explain this carefully to the customers so there is no misunderstanding. Since these are existing customers, is there anything that needs to be disclosed especially as it relates to the $35 fee or will the letter that is being sent suffice? It will be the customer's decision to accept the offer. Thank you.

Also, in your letter, as with any extension, remember to notify the customer that any credit life/A&H attached to the loan will not extend to the new maturity date.

Sorry, that was me on the credit life. Forgot to sign in.

Besides Okie's answer, if it is real estate secured, make sure you have the flood notices "Cannot make extend or renew. . .", also, if you are going to extend and the note/mortgage has a final maturity on the document, the extension would make the maturity date incorrect. You may want to check with your legal on the best way to proceed.