We have a consumer owner-occupied loan that began as a 2-year temporary loan which is now being modified to a 5 year amortizing with a balloon at maturity. The interest rate has been and will continue to be a "prime +" rate, with only a change of the floor rate (.025% higher). We are fairly confident that this would still be viewed as a true modification but it is being questioned whether this loan would now be subject to ARM disclosures. Would just by the virtue of it being a "variable" rate require these disclosures under Reg Z?

Adding a floor rate would be a feature of the variable rate program not previously disclosed. IMO this would be a refinancing requiring all new disclosures.

Its not an addition of a floor rate but an increase of the floor rate (from 5.00% to 5.25%). Do you think that would still warrant a refi?

If it's just a change in the floor rate then I think you would be OK.