Change In Terms - ATR?

Posted By: Love those Regs

Change In Terms - ATR? - 02/12/20 03:47 PM

Originally made a loan for major renovations to primary dwelling and set up as 12-month construction loan with intentions of them obtaining permanent financing elsewhere. Now, they are requesting we do permanent financing 61 month term with balloon payment. We are not doing a new note but rather a Change In Terms (CIT). Are "renewals" (change in terms note) covered by ATR? I have no doubt if we were starting with a new note this would have ATR but since we are using a CIT, I'm in doubt.
Posted By: Oursisnottoreasonwhy

Re: Change In Terms - ATR? - 02/12/20 03:58 PM

I would consider it a new application and start over with new TRID disclosures.
Posted By: rlcarey

Re: Change In Terms - ATR? - 02/12/20 05:35 PM

Unless what you are doing constitutes a refinance under 1026.20(a), the transaction would not be a refinance under Regulation Z and would not be covered.
Posted By: Love those Regs

Re: Change In Terms - ATR? - 02/12/20 06:25 PM

Randy, that is exactly what I was thinking. It does not meet the Reg. Z definition of a refinance. Thank you.
Posted By: Oursisnottoreasonwhy

Re: Change In Terms - ATR? - 02/13/20 08:47 PM

My question would be why wouldn't I do all my construction loans this way? Why give out 2 sets of TRID disclosures if I can simply do a change in terms of my construction loan and set it up on an amortization schedule??
Posted By: rlcarey

Re: Change In Terms - ATR? - 02/13/20 09:19 PM

A one off situation, I could argue. However I get a little uncomfortable with someone doing every 9 month construction loan and then modifying all of them into a 30 year mortgage. While like all things - it might be legal - and it also might be considered a UDAAP.
Posted By: Oursisnottoreasonwhy

Re: Change In Terms - ATR? - 02/15/20 03:39 PM

When you play with fire you usually get burned. I would take the extra week or so and do the new TRID loan and not give the appearance of circumventing the regulations.