Reg Z and the Fed Box Disclosure

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Question:

When we do a consumer loan extension, does Reg Z apply and a new fed box need to be disclosed? We've previously used extension agreements for adjusting rates, exchanging collateral, moving maturity and payment dates. Our software recommends a new loan be done to comply with Reg Z and the fed box disclosure.

Answer:

If you refinance the loan, you must provide new disclosures. Extensions, modifications and renewals are not redisclosable. See Section 226.20(a).

Here's the Commentary to Section 226.20(a) #1:
A refinancing is a new transaction requiring a complete new set of disclosures. Whether a refinancing has occurred is determined by reference to whether the original obligation has been satisfied or extinguished and replaced by a new obligation, based on the parties’ contract and applicable law. The refinancing may involve the consolidation of several existing obligations, disbursement of new money to the consumer or on the consumer’s behalf, or the rescheduling of payments under an existing obligation. In any form, the new obligation must completely replace the prior one.

First published on BankersOnline.com 11/13/06