Would the new Mortgage Transfer Disclosure rule apply if the customer comes to my bank and applies to refinance a loan. But instead of starting over from scratch by doing a new promissory note and lien instrument, we have the former bank endorse the promissory note to us (so we get the original promissory note) and execute a Transfer of Lien (recorded) to transfer the lien to our bank. We do this on rare occasion....usually to preserve the lien position. Once the transfer is complete, we do a Modification Agreement to modify the loan to the terms agreed upon between the lender and borrower.

IMHO - Yes.

I agree. You are not making a new loan to payoff the existing loan. You are "purchasing" the loan and then modifying it once you become the owner. This would also be reported as a purchased loan on your LAR if you are subject to HMDA reporting.

I know this is really lame, 'cause we all know how stupid regulatory law sometimes seems to be, but......

The customer came to us, applied, was approved, the transaction occurred......and so we send the customer a Disclosure within 30 days to inform the customer that we now own the loan. DOH!!! Without that required disclosure, I'm SURE the customer would not have had a clue as to where his loan ended up. Sheesh!!