Our Loan Administration Officer wants the loan processors to get a new loan construction agreement and a new loan application when a loan renews.

And when I say renew, I mean no new Security Deed, no new money, no new loan number, a true renewal.

Does anybody think it is overkill to get these documents when the terms of the loan haven't changed?? Please someone prove me wrong, but I don't think we need these documents each time.

I think it's overkill unless either of the following occurs:
1) The application is over 12 months old
2) You are changing any terms other than the maturity date (ie payment, rate, etc)

This is not the first time I've heard of a LAO doing this. Sometimes, it's just the way they were trained and they don't know any different. Other times it's because they went to some meeting where a "consultant" told them to do it that way. This is a reason why I always thought it was a good idea to send Loan Admin staff to a college business law class.

I agree with Raymond on the overkill. But what does your lending policy require - regulatory and policy requirements don't always match.

The only exception I would add to Raymond's would be the construction agreement. Are there terms in that agreement that need to be modified to coincide with the renewal?

I will tell you what a regulator or a CPA will tell you. They will insist that a loan renewal, even if no new money is given, is to be treated as a new loan, because the Bank had to make a new "credit decision". As such, a credit application is required. Also, requiring a new credit application for every "credit decision" is a very good way to ensure that you do not have any Regulation B violations that an overzealous attorney could charge. The new construction agreement might be necessary, based upon the wording of the original.

Remember, this is only my opinion.

All good advise (except the tone of Raymond's LAO comments). Everyone above is right and it depends on the situation. A short term extension to complete the construction would be different than a 12 month renewal for a project that was supposed to be completed in 12 months. Your policy might dictate the requirements and if not, you must rely on common sense and your lender.