[Vicki Kramer]

Good morning.

Help, please; I checked Reg Z but couldn’t find my answer.

It’s my understanding that the TRID rules require new disclosures if we change anything other than the payment due date or maturity date on an existing TRID loan. This discussion came up yesterday: We only charge a $35 modification fee when we modify a TRID loan by extending the due date out 62 additional months because the consumer doesn’t qualify for renewal of his TRID balloon loan because he can’t document the Ability to Repay; the consumer pays this fee in cash. Can we charge additional fees when modifying these loans? Additional fees would be flood determination, updated in-house evaluation or appraisal fee, VSI (mobile homes), another loan fee or higher modification fee.

Does anyone else charge these fees at modification?

Any regulation reference to explain why we can’t or why we can?

Thanks in advance for your help!

[rcooper]

If it is a refinance under 1026.20 new disclosures would be required.

[jholzknecht]

Vicki,

This issue is not just limited to TRID loans. Other closed-end credit loans subject to Regulation Z also trigger new disclosures when refinanced. If the loans is merely modified, then new disclosures are generally not triggered.

Regulation Z requires disclose of the fees imposed, it does not generally regulate which fees made be charged or the amount of such fees. If you intend to impose any fees when modifying an existing loan the fees and costs should be explained to the borrower. A TIL disclosure is a helpful format for disclosing those costs and fees. So while a TIL disclosure may not be required for a modification it may be a convenient way to disclosure the fees.

The flood regulations require a flood determination when a lenders increases, renews or extends a loan, unless the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. When a new determination is obtained the cost can be passed on to the borrower. The other costs can generally be passed on to the borrower.

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