The coverage for the new rule is for consumer purpose, closed-end, real estate secured loans with the exception of reverse mortgages. I'm reading this to include vacant land and land without a dwelling but another type of structure such as a garage, barn or even commercial property. Is this correct or am I reading it too broadly?

You got it, any closed-end consumer purpose loan secured by dirt is covered (except reverse). The construction only, bridge, bare land and 25 acres or more exemptions will all be gone as of 8/1/15.

Thanks for the confirmation. It's going to be hard to convince some lenders that a loan secured by commercial property is subject to the rule, but I'm sure they'll eventually believe me!

Well, consumer purpose loans secured by commercial property have always required TIL disclosures. Now it will just be the integrated disclosures.

Coverage really has been simplified under the Integrated Disclosures rule. Another way looking at it is that the "if's", "and's" and "but's" that that drive us all nuts and complicate things related early disclosure coverage will soon be gone. Maybe this will help with your sales pitch.

That's a good way to think about it. I will tell them they don't need to think so hard about whether they have to give early disclosures.

May I ask- if a loan is secured by a lot, but the loan is over the Reg Z threshold, it is exempt from all of this correct?

(Partial 1026.3(A) Secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer;

No, because if there is "dirt" the threshold does not apply under prior and now the "new" Reg Z rules. Therefore the TRID rules apply no matter the size of the loan on a land loan.

Where does it say that Kaybee? I'm not arguing, I just don't see in the exemption area where it says it does not apply to 1026.19 or .37 or .38.

No, if you have dirt it can't be exempt:

1026.3 = Exemptions, however, 3(b) says it's NOT exempt if the collateral includes real property... Therefore, if you have dirt, which is considered real property it can't be exempt.
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And that has always been in Z, and now makes those loans subject to integrated disclosures.

A consumer land loan never had a threshold under Z.

Thanks everyone.

Jerrod- doesn't this "used or expected to be used as the principal dwelling of the consumer;" part of that section eliminate land only loans. I am ok with them giving TRID disclosures but I think the loan is otherwise exempt from Reg Z which really has no effect since we will have to come up with an APR, etc. anyway to complete the TRID disclosures.

That part only applies to the personal property portion of that section. It is saying that a loan over the threshold can be excluded from Reg Z unless it is either secured by real property or secured by personal property used or expected to be used as the principal dwelling of the consumer.




(b) Credit over applicable threshold amount. (1) Exemption. (i) Requirements. An extension of credit in which the amount of credit extended exceeds the applicable threshold amount or in which there is an express written commitment to extend credit in excess of the applicable threshold amount, unless the extension of credit is:

(A) Secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer; or

Tesla, you need this video: It's all about that dirt, no dwelling.

https://vimeo.com/138324966

Tesla, what has your institution been doing with consumer land loans all of these many years? Not giving TILAs if over the Z threshold? The only difference here is now those loans go on the TRID disclosures. Z always applied.

I need more than that video - I need a drink!

We just started doing lot loans and when these exemptions came out a few years ago I said to ignore them and disclose on everything consumer purpose. They didn't listen but the head of the compliance department made this statement (lot loans are exempt from ATR and TIL due to the threshold exemption) and when I said land is real property they were adament that is not true. Can't argue with the boss, so I was trying to figure out where they were getting that and I could see it, but like I said, I told everyone to just ignore that exemption.

I really need a new job.

I don't know what to say. The "dirt" for Z has been there all along, with no limit. And that is why the TRID docs apply to more than home loans...because of Z's treatment of "dirt".

Yep. I think the next issue I have to figure out is ATR. I hope I can find an exemption for that because the head of compliance said they are exempt from that too.

Look at 1026.43.

(a) Scope. This section applies to any consumer credit transaction that is secured by a dwelling, as defined in § 1026.2(a)(19), including any real property attached to a dwelling,

Other than safety and soundness and common sense, only dwelling secured loans are covered.

Thank God and thank you - I'm done for the night. Thanks again.

Questions came up in our AG meeting yesterday: How do we treat a purchase where the 40 acres will be farmed (business purpose) and the home will be the primary residence (personal) - business or personal purpose for TRID?

Just to be clear, a consumer purpose loan that is secured by land that only has a structure on it (i.e. a garage) would fall under TRID, correct? Getting questioned and want to make sure I have not lost my mind.

Gracie Lou : If the primary purpose is farming and the home just happens to be there, likely you will still be AG, not consumer purpose. But only you can determine the primary purpose.

Bama: Yes. If it was just dirt, it will be TRID.