Is occupancy tied to the purpose or the property securing the loan?

I have a customer taking out cash from their existing home (owned free and clear, nothing refi'd) to be used for the stated purpose of buying a rental property. If they hadn't stated it, it would be a personal use loan and we have no info or security on the rental to be purchased.

I understand I would report the location of the existing home securing the loan. But they are not purchasing it, so does the loan "relate" for occupancy to the the non-owner occupied rental? Otherwise the data would suggest that they are purchasing their primary residence, and that doesn't seem right.

Occupancy status relates to the property you are reporting on the LAR.

If I use the equity in my primary residence to purchase a rental property you would report the loan as a purchase transaction and because you report the property securing the loan for home purchases you report my primary residence on the LAR and report it as owner occupied.

Thanks Dan,

I was thinking that was the case, but I was trying to get the non-owner-occupied in there somewhere since that was the original purpose.