The final loan regs are pretty clear about the ability to extend the pay off date of a loan if it was originally for less than the five years. However, the language, (at least to me ), is pretty muddy regarding a loan that would qualify under the mortgage exception.

If a participant took out a loan to purcase a principal residence that would have qualified for the 5 year mortgage exception, but the participant chose to set up the loan to be repaid in 5 years, and later a) takes a leave of absence or b) wants to refinance the loan, can the latest permissible term be the later pay off date the participant could have had on the loan because of the mortgage exception?

If yes, would this extended pay off date be available in the case of a refinancing only if the new loan also qualified for the mortgage exception?

Thanks to all who respond!

Carolyn