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#155072 - 01/29/04 09:40 PM Consumer Mtg. Protection Act - borrower
Bartman Offline
Diamond Poster
Joined: Oct 2000
Posts: 1,191
If you make a covered mortgage loan, but the borrower is a corporation, I'd argue that the corporation can not have a principal dwelling & therefore is not engaging in a 'mortgage loan' as defined in the act. If the owner of the home is also personally obligated on the debt, I'd argue that this transaction IS covered.

What if the borrower is a DBA? Would you consider the DBA the equivalent of a sole proprietorship, and therefore a covered transaction? What's your thought process?
Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#155073 - 01/30/04 06:35 PM Re: Consumer Mtg. Protection Act - borrower

How can the borrower be a DBA? A DBA is not a legal entity, therefore, the borrower is an individual who is covered by the Act.

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#155074 - 02/03/04 01:51 PM Re: Consumer Mtg. Protection Act - borrower
NMB Offline
Gold Star
Joined: Jun 2002
Posts: 255
Southeast Michigan
In keeping with the spirit of the Act, I have interpreted the Act to cover any loan where someone's principal dwelling is at risk, regardless of the borrower. I also find it easier to instruct the commercial lenders to give out the disclosures any time they take anyone's principal dwelling as collateral. (I have enough trouble getting them to understand that all "business" loans are not made to "business" entitites.)

The FAQs, recently provided by OFIS, state that "Commercial loans are subject to the Act only to the extent a commercxial loan transaction includes a lien on residential real property." It doesn't say WHOSE residential property.

I just looked at Bodman, Longley & Dahling's 1/10/03 newsletter and it looks like it supports your opinion. In the discussion of business purpose loans, it gives the following example: "Somewhere State Bank makes a "prime rate" loan to ABC Corp. secured by Steve's residence. Steve is the majority shareholder of ABC Corp but is not named as a borrower on the note. The Act does not apply."
My comments and opinions are my own, not my employer's.

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