This is a new one for me. We made a consumer purpose loan that should have been a commercial purpose loan. The individual is a horse trainer and constructed a barn to run a horse training business out of. Loan is secured by primary residence which will have the barn on the property as well. Customer is now asking for a rate reduction. Considering just doing a modification of the loan reducing the rate without any type of consumer disclosures since we didn't really need to disclose in the first place as opposed to making a new loan that would involve new appraisal/evaluation, title work, filing fees.... Anyone think of a reason not to do it this way?

Unless you are changing or adding a variable rate feature, a loan modification is not a refinance under 1026.20(a) unless you are totally replacing the existing obligation, even on a true consumer loan.