Modification? Refinance?

Posted By: ComplyCycle

Modification? Refinance? - 08/09/19 07:52 PM

I located a different thread which stated new money cannot be added to a loan without satisfying and replacing the previous obligation and considering it a refinance. Is this true if the new money is added as a delinquency prevention strategy? The loan is current, but the concern is that without additional funds to complete construction and sell the home, the loan will become delinquent.

Is this a refinance rather than a modification which therefore requires all new disclosures as well as a new mortgage and note? Or is there an easier way to assist the borrower?

All thoughts are welcome. Thank you.
Posted By: rlcarey

Re: Modification? Refinance? - 08/09/19 08:45 PM

There is a lot of moving parts to this question. Does the addition of monies extinguish and replace the original obligation under State law?
Posted By: ComplyCycle

Re: Modification? Refinance? - 08/09/19 09:01 PM

I do not believe so. We don't define "refinance" as satisfy and replacement. We don't define "refinance" anywhere as far as I can tell.
Posted By: rlcarey

Re: Modification? Refinance? - 08/09/19 09:58 PM

It is really a question for competent legal counsel.
Posted By: Richard Insley

Re: Modification? Refinance? - 08/10/19 03:24 AM

Maybe you can post a link to the thread that caused your concern. Answers to this frequent question depend on the details of the transaction and case law related to contracts in your state. The facts in the other thread may be different than yours.

So far as I know, the concept of a "refinancing" has no particular meaning outside Section 1026.20(a) of Reg. Z. Reg. Z can require new disclosures, but it can't require a new mortgage and note. Whether or not you need to replace note & deed of trust hinges on the way the courts in your state view changes in the terms of existing contracts. There's a very high probability that your legal counsel will tell you that "if it ain't broke, don't fix it" other words, amend only the parts of the contract that need to be changed.