Could I please have your opinion on the following. Is there a basis for the examiner stating that a refinance should not be reported because it looks more like a modification because no new money was advanced even though the existing note was replaced with a new note. The purpose of the loan was to refinance to lower the interest rate. There were a lot of this type of loans in 2002 and 2003 YTD.

"I spoke with xxxxxx @ the Fed Res. and we talked for some time concerning the "refinances" that we have for HMDA. As you know a refinance is defined as the satisfaction and replacement of an existing obligation by a new obligation by the same borrower. Because of the way that our loan officers "refinance" some of their loans he seemed to agree that they should be considered more as a modification even though the lender has a new note. Several factors come into play to make this determination. 1. The loan had not matured. 2. The borrower is not released from the original obligation either by receiving a paid note or a letter showing the original obligation is paid. 3. The same loan number is used. Mr. Nurney stated that even though we "renew" the loan it is technically a modification because of the above factors. Modifications are not considered refinances under HMDA reporting. "

Sounds like a modification to me, especially considering your point #2.

All the mannerisms of a modification seem to be in place. Check the wording on the new document and see if the original document is still in place and if the new documnet is in fact a modification agreement amending terms of the original document.

The new documnet would be recorded and IMO it would make reference to the original document. Otherwise its a possibility you could loose your 1st position.

It is done as a new note with all new disclosures including TIL, RESPA, flood, etc. I don't understand how it could be thought of as a modification. We also do real modifications where the previous note is referenced as remaining intact except for what is modified. New disclosures are not provided for these.