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Residential or Commercial?
Answer by Dan Persfull, BOL Guru
Guru Bios
Question: A residential property was transferred from a husband's trust (upon his death) 1/3 to his wife's trust and 2/3 to an LLC of which his sons are the only members. The LLC wants a mortgage and a line of credit secured by the residential property but their mother still lives in the home. The notes will only be in the LLC's name and both entities will sign the mortgage (the sons as members of the LLC and as trustees of the trust). The mortgage funds are being used to consolidate mortgage debt on the property and the line is available for whatever but will not be used initially. Since my borrower is an LLC should we treat these two loans as commercial loans? Since it is a residence do we also need to do HMDA reporting?
Answer: Loans not made to a natural person are exempt from the provisions of Reg Z, but they are not exempt from the provisions of Reg C.
First published on BankersOnline.com 11/06/06
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