We have an occasional scenario where a borrower wants to finance a residential property that is or will be deeded to an LLC or even sometimes a corporation. While we do these to accomodate our higher net worth clients, we also have the individuals sign the note and mortgage in addition to the LLC or corporation. They in essence are a co-borrower. Sometimes these are vacation homes and sometimes they are the primary residnece of the "co-borrower".

Our challenge is these require an attorney to assist with sorting out the legal documentation of the LLC or Corporation and advising us on who shall sign for the entity and occasionally drawing up some affidavits. The legal fees can vary widely from $750 - $2500. Obviously if the loan is subject to RESPA, this is a major challenge.

Does bringing the individual in as a co-borrower make the transaction RESPA eligible?

Thanks!

Depending on the nature of the transaction, i.e. consumer purpose, having one of the co-borrowers be a non-natural person does not get it out from under TIL and RESPA.

RESPA 3500.5 exempts business purpose loans as deifined at 226.3(a)(1). It does not exempt loans under 226.3(a)(2).

If the loan is for a consumer purpose it is subject to RESPA.

Thanks gentlemen. It is indeed consumer purpose.