We have a heated debate on the definitioin of "extend" in regards to MIRE and flood requirements for a flood notice.

Does the term extend include the monthly extension of a payment?

Flood would only come into play if the maturity of the loan was extended. If all you are doing is deferring a payment, then no.

But a monthly deferral not only extends the next due date but also pushes the maturity date out one month...

If that is the case, then it would apply. Your deferral modification agreement would have to actually extend the term of the note or your note would have to call for continued payments after maturity for remaining balances due for this to be the case. Otherwise you just end up with a balloon payment at the end of the loan.

P.S. Mathematically, the deferral of one payment, depending on the term of the loan and the timing could extend the loan for much more than one month.

Thank you so very much!

After yesterday's FEMA webinar, I had the same question as the subject of this thread and found this thread through a search. The perception here (not necessarilly my perception) is that the word "extend" could be the same meaning as "grant".....grant a loan, extend a loan.....whatever. Even FEMA's guide uses the word "extend" in reference to "making" a loan (and example....page 55, 2nd paragraph). Anyway, can you point me to a definition or other written support that the word "extend" means, as you say, the extension of maturity? I can't seem to find any written support for that and with no written support, I'd be butting my head against a brick wall trying to mandate a notice any time we extend maturity. I mean.....the opening sentence of the notice doesn't even fit a situation where a maturity of an existing loan is being extended. I've combed the Q&A, FEMA's Guide and the FDIC Rules and Regs. Is there some place else where I can look?

I have a question to pose that is related to this thread.. Within our note, we have an automatic 60 day extension. It is written into the note and signed by the customer. At the time of maturity, the automatic 60 day extension goes into effect. No new documents are prepared as it is simply a change in the maturity date within our systems. Would this be considered an extension and require a notice being sent to the customer or would this be covered by the original signature on the note that outlined the 60 day auto extension?

Swiggles: I don't know that there is any legal definition of "extend"; however, the already uses the word "make" so "extend" must have a different meaning or it would be redundant. My opinion:
Make = new loan.
Increase = add money to a loan.
Renew = "do over" of the same loan.
Extend = push the maturity date out.

Rocks: I don't understand. If it's an automatic extension & they already agreed to it, it sounds like the original term. I've never heard of such a thing.

David,

That is my thoughts exactly however we have a compliance consultant company that disagrees. To me, the customer is signing the note with that automatic 60 day extension at origination and nothing is being changed. The extension of the maturity date is written into the note and originally agreed to. Our consultant is indicating that we would need to order a new flood determination and provide the notice of special flood hazards prior to pushing out the maturity date for the 60 days & then potentially again at the end of the 60 days if we are re-writing the loan. Seems like overkill to me, especially since the customer had signed already.

I'm not quite sure why the automatic extension is written into the agreement, but the loan matures on X date. If the loan is not repaid by X date the borrower previously agreed to allow the maturity date to be extended for 60 days by the lender. So both parties have agreed to extend the maturity date if the loan is not paid by that date.

Regardless how you look at it, the maturity date is being extended and I don't see how you can exempt it from 339.3 even if the extension is agreed to before hand.

Related question - does "increase" mean any increase to the current principal balance of the loan, or does it only refer to an increase above the original loan amount? For example, if I have a loan that is modified to reduce the rate and I add a $500 modification fee to the loan balance, which is still less than the original loan amount, do I need a new flood cert if the existing cert is more than 7 years old?

You increased the current loan balance therefore the flood rules kick in.

I have a related question....

We had severe flooding in our area a couple of years back. One of our borrowers homes was badly damaged in the flood. Flood Insurance kicked in and covered the balance of the loan less $5,000. The original maturity date of the loan was 2022. We have now modified the loan to a balloon payment of $5K plus interest due at year end 2010 when the property is to be bought out and demolished. Normally, I tell my lenders that a flood notice must be signed anytime anything is done to a loan with property in a SFHA. However, they missed the notice this time around. But I am thinking we probably didn't need one according to the regulation. What are your thoughts? I don't think we made, increased, renewed or extended??

I agree. However if you had refinanced the loan for $5,000 or less with a term of 1 year or less the loan would be exempt from the flood rules. By modifying the terms you are still subject to all the flood insurance requirements.

Good point. Thanks Dan.

I have a follow-up question related to this thread, I have a ops office telling me that if we do an internal extension (the customer does not sign anything or ask for the extension) we just decide to give it to the customer, we do not have to follow the flood requirements related to extending the loan. This was the approach their previous bank took. Is this true?. Their basis for the this belief is the fact the flood regs do not define extension.

Please help.

Thank you.

It doesn't define make, increase or renew either.

If a covered institution makes, increases, renews or extends a designated loan (339.3) it is subject to the regulation.

I think you need to explain this "internal" extension a little more. Sounds like a ploy to avoid reporting past due loans on the call report.