Customer has a HELOC with the bank.

Customer goes into bankruptcy, but fails to affirm his debt with us.

Customer now comes to us wanting to redo the note.

Bank wants to work with him and do a new note (since the first has been blown out) at a fixed rate with a fixed term, based on the customer's request.

Bank wants to says that this is simply a workout deal and no new disclsoures are needed. I am concerned this is more of a refinancing, and needs to be treated as such (new note, and TIL).

Opinions?

Modification?
TDR?

I very strongly suggest you contact your attorney before you proceed. If the borrower did not reaffirm the debt and it was included in the bankruptcy, and you did not partition to foreclose on the property, then you most likely have no legal capacity to collect the debt and any reaffirmation or foreclosure most likely will have to be approved by the bankruptcy court to avoid "creditor favoritism".

While I appreciate that advice, the determination has been made by the appropriate officers of the bank that we are moving forward with this.

I just want to ensure we are doing what we are to correctly, assuming we have the ability to do so, as best as we can.

"Bank wants to work with him and do a new note"

To me, that sounds like a refinance. A new note that satisfies a previous note.

What is the reluctance to provide disclosures? I don't see how it can hurt to provide them.

They do not feel disclsoures are needed since this is considered a 'workout' and not really a refinance, since the mortgage itself continues to remain in place. The note essentially no longer exists due to the bankruptcy.

They feel that since this is a workout since it is normally not a lon we would make as a bank or be allowed to (underwater, highert han allowed LTV). They see it as the customer got bad advise from their attorney or was sloppy in not affirming our debt, and thus would like to work with him so we get somethig out of him, versus writing it off as a loss. So, since it is a 'workout' they feel disclsoures are not warrented since we are just modifying a current note, which in my opinion no longer exists.

Unless said officers are attorneys (with knowledge in this area), I would take Dan's advice. Whether or not you give disclosures won't even compare to what could happen down the road and disclosures would be the least of my worries.

Again, while I appreciate that advice, that is not my call to make and the suggestion has already been made by me, and vetoed.

I am trying to, and being expected to work within the parameters I have here.

Sounds like the officers have already made a decision on the disclosures as well and what you come back and say may not matter either. If it were me, I'd disclose. The loan DOES still exist and it is essentially being refinanced. Sounds like you've already made up your mind though.