We believe you may modify the mortgage loan to extend the maturity date without providing disclosures under the TILA-RESPA Integrated Disclosure (TRID) rule, provided that you do not satisfy and replace the existing mortgage loan with a new transaction.

Under Regulation Z, if a business purpose loan is later rewritten for consumer purposes, “[s]uch a transaction is consumer credit requiring disclosures only if the existing obligation is satisfied and replaced by a new obligation made for consumer purposes undertaken by the same obligor.” This language mirrors Regulation Z’s general rule for “refinancings” — a refinancing requiring new disclosures occurs only when an existing obligation is “satisfied and replaced” by a new transaction, which is determined by the language in the parties’ contract and applicable state law.

There are a few court decisions that indicate how to structure a transaction as a modification, as opposed to a refinancing. The difference depends on the specific language that you use in the documentation to modify the loan. For example, one federal court in Illinois found that a modification agreement did not constitute a refinancing because it specifically stated that it was merely amending and supplementing the original loan agreement and not satisfying or releasing the existing obligation. If your extension of the loan agreement does not satisfy and replace the existing obligation with a new obligation, we believe you may treat it as an extension and not as a refinancing requiring TRID disclosures.

For resources related to our guidance, please see:

• Regulation Z, Official Interpretations, Paragraph 3(a), Comment 6 (“Business credit later refinanced. Business-purpose credit that is exempt from the regulation may later be rewritten for consumer purposes. Such a transaction is consumer credit requiring disclosures only if the existing obligation is satisfied and replaced by a new obligation made for consumer purposes undertaken by the same obligor.”)

• 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. A refinancing is a new transaction requiring new disclosures to the consumer.”)

• Regulation Z, Official Interpretations, Paragraph 20(a), Comment 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. . . .”)

• Rodriguez v. Chase Home Finance, LLC, 2011 U.S. Dist. LEXIS 108837, **9–10 (N.D. Ill. 2011) (“Here, Rodriguez’s Modification Agreement states that it ‘will amend and supplement (1) the Mortgage on the Property and (2) the Note secured by the Mortgage. . . .’ In short, because the Modification Agreement merely modifies the previous loan rather than cancelling the loan and creating a new obligation, Rodriguez’s modification does not constitute a ‘refinancing.’”)