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Requirements for 3 Year Ballon Note Extension

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Question: 
We have a customer with a 3-year balloon note on their primary residence (2nd mortgage) that is coming due. The maturity date is approaching and they will not be able to pay the balance in full. They were asking for a 90-day extension. Can we do an extension/modification on the current 3-year balloon note without extra disclosures or do we need to set up a new note?
Answer: 

You can certainly do a loan extension without new disclosures. TIL, RESPA and HMDA will not apply to this extension if you merely modify the maturity date and don't replace the original loan with a new loan [refer to Section 226.20(a) in Reg Z and the definition of "refinance" in RESPA and HMDA].

You have to comply with the flood insurance requirements, but you may be able to rely on a previous SFHDF.

First published on BankersOnline.com 8/8/11

First published on 08/08/2011

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