Can I simply send a change in terms to move existing open-end loans to closed-end?
No. You’ve contractually agreed to provide these open-end accounts to your members. To convert to a closed end agreement, different disclosures and new loan documents must be provided amounting in essence to a refinancing of the loan. Your members must agree to terms by signing new documents prior to consummation. If any member does not agree to a change in terms, you must keep the open-end account available to them, thus requiring a need to comply with the new regulation. Additionally, refinancing these advances may affect the status of your lien position. Won’t it be easier for us to just do closed-end loans? Not necessarily. This is a complex decision. Because you must comply with the regulation for all remaining open-end products (such as overdraft lines of credit, open-end advances, HELOC’s and other lines of credit), doing closed end loans prospectively will require you to manage two separate and distinct lending systems concurrently. Further, as long as open-end loans remain out
