I thought I was beginning to understand this, but a question came up about modification agreements. I did a little research and found this on another website:

"Modifications and Disclosure Considerations
Where it is possible, your institution should try to execute a modification agreement detailing any changes made to the underlying debt instrument. Remember to have any modification agreement clearly spell out a duty on the part of your borrower to inform you when he or she returns from active duty.

As you would imagine, a modification of your loan agreement can result in additional Truth-In-Lending disclosures. Specifically, if you have an adjustable rate mortgage loan, you are supposed to notify the borrower at least 25 days prior to the expected receipt of a payment at the new amount of a change in the APR. Reg Z, section 226.20 (c). It is highly unlikely that you will have the opportunity to meet this timing requirement. However, you should still send the notice as soon as possible after you find out about a borrower's eligibility under the Act. And you should expect to comply with this timing requirement when the borrower returns from active duty and you change the rate back to the contract amount."

I know under Reg Z we may have to do a 15 day change of terms disclosure for open-end credit. Are any of you doing modifications? Just want to make sure I'm not leaving something out. Thank you as always.

I'm sorry I meant to say the 15 day change in terms for open end credit was when the rate is returned back to its original rate.

Sorry if I confused anyone.

This is an interesting point. Although modifications don't trigger new transaction disclosures for closed-end credit, changes that affect the rate/payment on an ARM loan trigger the 20(c) disclosures.

Our bank is planning to offer some terms that go above and beyond what the SSCRA requires. As part of the research for this, I spoke with an individual who is legal counsel for the OCC in the Consumer Law Division in Washington D.C. Here is what I was told the OCC take on this issue is:

Lowering the rate does not require a modification or extension agreement or new disclosures. Providing the information to the customer regarding changes, etc. via letter is sufficient. No other notification is required for closed end credit. However, any open end credit will require a notification prior to adjusting the rate back to the original level after active duty ends.

Mary Beth, if you're there - would you have any thoughts or information on this? I sat in on the BOL SSCRA training, but I don't recall this being discussed. Thanks.