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#2132014 - 05/25/17 08:49 PM Land loan
lisawin Offline
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Joined: Sep 2015
Posts: 77
Mississippi
I have a renewal of a land loan for 5 years and the customer is not getting any new money. The loan number stayed the same. Would TRID apply?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2132018 - 05/25/17 08:58 PM Re: Land loan lisawin
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
If the current note (loan obligation) was satisfied and replaced with a new note then it is a refinancing and new disclosures would be required. You can review 1026.20 to see if you have a refinancing.

The note number is nothing more than your internal tracking mechanism and has no influence in determining if the transaction is a refinancing.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2132033 - 05/25/17 09:44 PM Re: Land loan lisawin
crcmnot Offline
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Posts: 351
Lisawin/Dan - can I jump on the bandwagon here???? This scenario comes up quite a bit in the forums; the definition of a 'refinance'. I think some of the confusion comes into the meaning of 'satisfied & replaced'. In my Bank's case, we do a lot of 'renewals'. Normally done with a Change in Terms Agreement extending maturity & keeping payment terms & rate the same; the Note # also stays the same. However, we reference in the Change in Terms that this is a 'renewal of Note #xxxx dated xxxx in the amount of $xxxx'. We have a standard procedure that if a loan has been renewed several times (approx. 5) with a Change in Terms Agreement, we will prepare the next renewal with a Promissory Note document. Just like the Change in Terms Agreements, we reference that this is a 'renewal of Note #xxxx dated xxxx in the amount of $xxxx'. Very rarely do we mark a previous Note 'paid' if we are renewing the loan. I am assuming that if we mark a previous Note 'paid' that this is clearly going to be a refinance for the subsequent transaction but just the process of preparing a Change in Terms or Promissory Note as explained above would constitute a modification.........not a refinance, correct?

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#2132060 - 05/26/17 01:33 PM Re: Land loan lisawin
lisawin Offline
Member
Joined: Sep 2015
Posts: 77
Mississippi
Thanks Dan that is what I was thinking. We do sign a new promissory note even thought the loan number stays the same.
crcmnot- We don't send disclosure when we are doing a change in terms because that is not replacing the note. To me when we have a new promissory note we are started a new contract and satisfying the old one. I might be wrong.

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#2132065 - 05/26/17 01:40 PM Re: Land loan lisawin
RR Joker Offline
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RR Joker
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The Swamp
crcmnot, you need to ask your legal counsel. Also, read your note language. Our Modifications, for instance, specifically say this does not extinguish or replace the original obligation. Language is key to determining what you really have.

There is typically a difference in language between a note generated for a refinance vs renewal, but you must determine how yours actually reads.
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#2132123 - 05/26/17 03:59 PM Re: Land loan RR Joker
crcmnot Offline
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Joined: Sep 2016
Posts: 351
I actually just ran a test loan and prepared a promissory note rather than a change in terms to extend maturity. The 'renewal' note did not include any language in regards to extinguishing any prior notes. The original note and 'renewal' note both include language that states that 'Lender may renew or extend repeatedly and for any length of time, this loan.....'

Thanks both for your input and letting me jump in!

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#2132130 - 05/26/17 04:06 PM Re: Land loan lisawin
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
That would not make me feel warm and fuzzy. You need to find language that specifically states that the 'renewal' not does NOT satisfy and replace the original. wink
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2132141 - 05/26/17 04:19 PM Re: Land loan lisawin
crcmnot Offline
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Joined: Sep 2016
Posts: 351
From our LOS. The field this is referring to is titled ' Description of Renewed or Refinanced Indebtedness'. It looks like Texas will specify that the renewal does not replace the original note. I am in WA.

This field allows you to enter a description of the indebtedness that is being refinanced by the new loan to print on the following documents:
- Promissory Note or standard or extended Change in Terms Agreement for a closed-end loan
- Credit Agreement and Disclosure or standard or extended Change in Terms Agreement - Credit Agreement for an open-end loan
When the General State Law State is Texas, the provided description will print preceded by the heading “Renewal and Extension” and the introductory phrase, “This <Note/Agreement> is given in renewal and extension and not in novation of the following described indebtedness:” For other states, for closed-end, the provided description will print simply with the heading “Prior Note” and, for open-end, it will print with the heading “Prior Note or Agreement.”

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