ALEXANDRIA, Va. (2/14/12)--Mortgage loans that comply with a 40-year, long-term maturity limit when they are originated will continue to comply with that maturity limit, even if they are renegotiated and their maturity is extended, the National Credit Union Administration (NCUA) has said.
NCUA General Counsel Michael McKenna in a Feb. 10 legal opinion letter said this interpretation of the rule "is consistent with guidance provided under federal residential mortgage loan modification programs."
The NCUA in the letter provided an example of how the policy would work. In that example, the agency cited a 40-year mortgage loan that was originated in 1980 and refinanced in 2010. While the original maturity date of the mortgage was 2020, after refinancing, that maturity date has been extended until 2050. "The loan term is determined from the modification date, not the origination date," the agency said.
McKenna noted "all long-term mortgage loans and loan modifications are, of course, subject to safety and soundness review," and NCUA examiners "may have a basis to object to a particular loan modification for safety and soundness reasons, even if all regulatory requirements are satisfied."
For the full NCUA legal opinion letter, use the resource link.