The bank originated a loan with a variable rate and a term of less than 12 months for the purchase of a principal dwelling and the loan is secured by that dwelling. The intent is for the borrower to pay off the loan at maturity with their annual bonus. So far I am ok, this does not met the definition of an ARM. It turns out that the borrower pays off all but $50,000 of the loan. The bank wants to renew the loan with same rate, etc. and the loan processor is telling them that they can either fix the rate on the renewal or if they keep the variable rate, it is now an ARM. I'm disagreeing in that the original loan had a term of less than one year and would be subject to the requirements of 226.18 versus 226.19 and a renewal of the original loan is not now an ARM. Am I overlooking something? Thank you for your help.