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#1129310 - 02/13/09 12:41 AM Consumer or Commercial
dg Offline
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Joined: Jan 2005
Posts: 811
Pacific NW
I have a loan that was made to an individual for personal use. The collateral is the crop that is grown and leased by a another farmer that leases it from the indivual that borrowed the money. Would this be a subject to Reg Z because the purpose of the loan proceeds are for personal use or would it be exempt because the collateral is that of a commercial purpose. Does Reg Z always look at the Purpose of the loan proceeds?

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Lending Compliance
#1129324 - 02/13/09 01:39 AM Re: Consumer or Commercial dg
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
I'm having some trouble unraveling who's leasing what to whom & why that has anything to do with the loan, but purpose rules.
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#1129540 - 02/13/09 03:27 PM Re: Consumer or Commercial Richard Insley
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Yes, subject to Z. Cases like that cause interesting problems on system coding! wink
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#1129759 - 02/13/09 05:08 PM Re: Consumer or Commercial RR Joker
dg Offline
Platinum Poster
Joined: Jan 2005
Posts: 811
Pacific NW
Yes, it was caught unfortunetly by an examiner that was reviewing for CRA data. It is however an isolated situation. We do not ususally secure the loan with the crop just a personal guarentee. Now I'm wondering, we have a Reg Z violation because it was disclosed as commercial. Will we need to re-disclose? Will we need to re-imburse?

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#1129929 - 02/13/09 06:31 PM Re: Consumer or Commercial dg
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
We ere on the side of caution, even on isolated cases, by refunding the fee/charges so that it reverts back to the note rate.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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