NEWS: The League now offers a new Wisconsin Simple Interest Loan Modification Agreement (#83002) to replace its Simple Interest Deferral Agreement. The new form offers three different repayment structures, to meet the needs of more credit unions. The form is designed for use with WCUL closed-end simple interest loan notes with a monthly payment schedule. The form has been approved by the Wisconsin Department of Financial Institutions as compliant with the Wisconsin Consumer Act.
The new form is a loan modification agreement that defers one or more payments. It has multiple repayment options for the credit union and borrower to choose from:
- When section 3(a) is used, the form functions as an extension, moving back the final due date of the loan. This is the functional equivalent of using old form #81045.
- When section 3(b) is used, payments are deferred without extending the final due date, resulting in a balloon payment.
- When section 3(c) is used, the monthly payment amount is increased to recapture the deferred payments without extending the final due date.
The (b) and (c) repayment options avoid extending the final due date of the loan, so they may be attractive options for mortgage loans. The form adds new features and protective clauses, so users of the old deferral form (#81045) are encouraged to shift to the new form #83002.
The new form does not accommodate other types of modifications, such as decreasing the interest rate. However, the League is exploring creating such a form for use with WCUL loan notes.
The .pdf file of the Wisconsin Simple Interest Loan Modification Agreement will be provided soon by email to all current licensees of the old deferral agreement at no additional charge. Other credit unions may purchase the form online at theleague.coop > Solutions > Credit Union Forms > Consumer Loan Forms.
Although the form has been made as generic as possible, we cannot assure that it can be used with other vendor’s loan notes. You may consult your attorney to see if it is compatible with your original note. For example, it is not compatible with FNMA/FMAC forms.
For more information about the form, see newly updated ii Release No. B037 – Simple Interest Deferral and Extension Agreements. It provides images of the two-sided form and line-by-line instructions in Exhibits C and D. The body of the release addresses:
- When deferral and extension agreements may be used
- Availability of deferral and extension agreements
- Wisconsin Consumer Act form requirements
- General considerations
- Extra considerations for mortgage loans
- Truth in Lending disclosures
A sample of the new form is available here. For questions about issues with ordering the new form on our website, please contact Jeff Bonk.
For questions about use of the form, please call the League’s Compliance Hotline at (608) 640-4050 or email the Compliance Mailbox.