#1096340 - 12/12/08 03:46 PM
Re: Ln to Corp - Reg. Z? RESPA?
Anonymous
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Joined: Nov 2002
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The Swamp
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I do not agree with the speaker (and often don't!). RESPA is purpose driven, not entity driven. Althought you have an unusual situation (but not all that uncommon in today's world) being that the loan is to an entity (exempt reg z), but the purpose is personal,so, I would not exempt from RESPA for that reason.
Both RESPA and REG Z specifically exempt business purpose , but only Reg Z goes further to exempt loans to entity's and still relies on business purpose.
My opinion on the below section of RESPA, is that it only pertains to loans for determining whether or not you have a business purpose or not.
(2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by Regulation Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining whether the exemption applies.
Last edited by RR joker; 12/12/08 03:51 PM.
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#1097002 - 12/13/08 01:32 PM
Re: Ln to Corp - Reg. Z? RESPA?
Anonymous
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Joined: Jul 2001
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Galveston, TX
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OK - since my name has been bandied about, I thought that I would chime in. The thread in which I made the statement in which I was quoted was made last February. Since that period of time, I have come to the personal conclusion that Dan was technically correct in his presentation. The RESPA exemptions only cite "Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by Regulation Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining whether the exemption applies." 226.3(a)(1) states:"An extension of credit primarily for a business, commercial or agricultural purpose.", which eliminates all loans that are not consumer purpose. It does not however include 226.3(a)(2): "An extension of credit to other than a natural person, including credit to government agencies or instrumentalities.", which is the organizational credit exemption. As such, technically, I no longer believe that organizational credit is automatically exempt from RESPA and that the attorney at your seminar is correct. Organizational credit extended for consumer purposes appear to be covered. Whether that was the intent of RESPA or not, it is hard to say, but a strict reading of the regulations leads to no other conclusion. We all know how well HUD writes and interprets RESPA , it may be just another one of those oversights.
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#1196381 - 06/05/09 01:35 AM
Re: Ln to Corp - Reg. Z? RESPA?
Anonymous
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Galveston, TX
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Loan is not RESPA since not to a natural person but to a corporation so not a consumer purpose loan. Not necessarily. It could be consumer purpose if the principals of the business are going to live in the property. RESPA exempts: "An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by Regulation Z, 12 CFR 226.3(a)(1)." The exemption covering extensions of credit to other than a natural person, including credit to government agencies or instrumentalities is found in Reg. Z at 12 CFR 226.3(a)(2).
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