Extension of Mortgage Loan When Use of Property Changes
Issue/Inquiry
The Bank has a residential mortgage loan secured by a live-in/work space condominium unit that was the borrower’s primary residence and office at the time of origination. The purposes of the loan were to refinance an existing loan on the condo unit that was used to pay for renovation expenses for the conversion of the unit, which was purely commercial, into a live-in/work space and provide business working capital. The loan is maturing and the borrower has requested an extension of the term. The borrower has stated in writing that the condo unit is now used primarily for business, and the borrower currently resides in another apartment. Therefore, the Bank would like to convert this residential mortgage loan into a commercial mortgage loan. Is there any residential mortgage loan regulation that would prohibit it from making this conversion?
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