We are not aware of any express requirement to review a consumer’s credit report when modifying an existing loan to extend its terms, but whether reviewing a credit report would be appropriate for a specific loan can depend on many factors, ranging from safety and soundness considerations to consumer protection considerations (the latter is discussed below).

Regulation Z’s Ability-to-Repay (ATR) rule generally requires lenders to consider various factors prior to making dwelling-secured loans, including a borrower’s current debt obligations, monthly debt-to-income ratio, and credit history. The rule does not expressly require lenders to review credit reports as part of their ATR analysis, but the official interpretations do note that credit reports are reasonably reliable third-party records for verifying the required considerations.

Note, however, that the ATR requirements do not apply to renewals of existing loans, provided the renewals are not considered “refinancings” under Regulation Z. (Generally, a refinancing occurs when an existing obligation is “satisfied and replaced” by a new transaction — language in your loan documents and changes in terms other than extensions of maturity dates are relevant to this determination.)  But also be aware that the CFPB increasingly is applying its ATR expectations beyond residential lending.

Other than the ATR rule — which may or may not apply to the loan in question — we are not aware of any express requirements to review a credit report when extending the maturity date of an existing loan.

For resources related to our guidance, please see:

• Regulation Z, Ability-to-Repay Rules, 12 CFR Part 1026.43(c)(1) (“A creditor shall not make a loan that is a covered transaction unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms.”)

• Regulation Z, Ability-to-Repay Rules, 12 CFR Part 1026.43(b)(1) (“Covered transaction means a consumer credit transaction that is secured by a dwelling, as defined in § 1026.2(a)(19), including any real property attached to a dwelling, other than a transaction exempt from coverage under paragraph (a) of this section.”)

• Regulation Z, Ability-to-Repay Rules, 12 CFR 1026.43(c)(2) (Requires lenders to determine a borrower’s ability-to-repay based on eight specified factors including current debt obligations, monthly debt-to-income ratio, and credit history.)

• Official Interpretations, Regulation Z, 12 CFR 1026, Paragraph 43(c)(2)(viii), Comment 1 (“Section 1026.43(c)(2)(viii) does not require creditors to obtain or consider a consolidated credit score or prescribe a minimum credit score that creditors must apply. The rule also does not specify which aspects of credit history a creditor must consider or how various aspects of credit history should be weighed against each other or against other underwriting factors.”)

• Official Interpretations, Regulation Z, 12 CFR 1026, Paragraph 43(c)(3), Comment 3 (“A credit report generally is considered a reasonably reliable third-party record under § 1026.43(c)(3) for purposes of verifying items customarily found on a credit report, such as the consumer's current debt obligations, monthly debts, and credit history.”)

• Official Interpretations, 12 CFR 1026, Paragraph 43(a), Comment 1 (“§1026.43 does not apply to any change to an existing loan that is not treated as a refinancing under §1026.20(a)”).

• Regulation Z, 12 CFR 1026.20(a) (A “refinancing” occurs when “an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer.”)

• Rodriguez v. Chase Home Finance, LLC, 2011 WL 4435633 at * 3 (N.D. Ill. Sept. 23, 2011) (Holding that the language in a loan modification agreement merely modified the previous loan rather than cancelling the loan and creating a new obligation, so that the modification did not  constitute a “refinancing.”)