I have an employee loan on my house which provides me with a preferred rate. The bank is now asking all employees who have employee loans to sign a modification to modify the rate in the event that we are no longer employed with them. The current modification states that our rate will change to Prime + 1 variable. The new modification will state that the rate will be Prime + 1 with a floor of 5.5%. I have been told that any employee who refuses to sign the new modification will be fired and that anyone caught talking about it will be fired as well. Can the bank do this?

No. Call your attorney.

Prior to calling your attorney, possibly when asked by the person who will talk with you concerning this, you can ask what are the ramifications if you refuse. If they say termination, then call your attorney.

OK - this wouldn't make any sense. How are you supposed to repay the loan if you don't have any income?

My direct supervisor is the one who told me that I would have to sign the modification or be fired when I raised questions concerning the modification. You would have to know my supervisor because I understand that this sounds crazy to most but this is normal behavior for this person. And the threat is not empty I assure you. But I asked the same question which was "how would I pay the loan back without a job?". Thank you for the advice. I will definitely contact my attorney so that he can be ready if needed.

I'd have a discussion with HR as well...