Ugh..it's too early on a Friday am! Okay, I know I've seen this discussed somewhere, but have no idea how it might have been titled, so...

If you have a person buying a home for his mother-in-law...how would you disclose it. I can't make it "fit" business purpose, yet it doesn't fit primary or secondary loan requirements eithier...it's being repaid from personal income.

It's a non-primary residence personal real estate loan. Disclosures would be the same as any other consumer real estate purchase loan.

I think that this is treated the same as a rental house. This is not the borrower's primary dwelling and it not a 2nd home/vacation home for the borrower. Whether or not the borrower charges rent is not a factor.
(I'm assuming that the title of the home will be in the name of your borrower).

I think this one is a consumer purpose loan too. While it is not a vacation home, I think it would be considered his second home, especially if it is titled in the borrower's name. This just seems to be the clear and safer way to go. How about that Dave, the student questioning the teacher (I used to work with Dave)?

I stand with my view (not yet Tom, not yet).

I requested a written reply from the FRB one time (and got it ) about a home purchase in a college town. The reason was the parent's wanted to buy a house for their daughter while she was in college. She was not on the Title. The FRB said this was a rental house, even if the parent's don't charge rent. It is not their house (either primary or secondary). Therefore, it must be a rental - a non-owner occupied house.


Tom said:
"I think it would be considered his second home, especially if it is titled in the borrower's name."
Aren't all rental houses titled in the borrower's name? If you put the resident's name on it, this would definitely make it a consumer loan. My point exactly, is that it IS in the owner's name, not the person who lives there.

This is a good one. Bottom line, you may want to provide consumer disclosures just to avoid this type of argument with your examiners. Depends on how much you like to fight.

Quote:

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If you have a person buying a home for his mother-in-law...how would you disclose it.

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If she currently lives with him, quickly!

I'm with David. Rental isn't defined but he doesn't live there and doesn't plan to occupy it, who said rental has to mean for profit or money. Perhaps it is just peace of mind. He wants her to have a safe place to live (perhaps outside his family home) and that is payment enough.

Seriously, that would meet with the spirit and intent of the Reg.

I agree - anytime someone buys a dwelling for someone elseto live in, it's a non-owner occupied rental.

Just don't forget about HMDA reporting and flood hazard verification.

Well, I can see it from all sides, and as much as I'd like to make it rental (and I sure don't mind standing up to regulators ) I went with the "Second home and OTHER consumer" category. Fewer disclosures, but disclosed none-the-less. If something ever happens to MIL...perhaps then it would be investment either re-sale or rental, however for now, he's paying it out of his personal income, so I'm using "other" consumer based on purpose.

We are in a university town and have seen the parents buy for student condo loans...those are somewhat more justifiable because they are looking at a short-term deal and then a turn-around investment...those are usually classified as investment properties, but this one isn't...therefore my reasoning.