Thread Options
#1571749 - 06/29/11 07:28 PM Consumer or Commercial Loan?
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
The loan is to payoff/combine a dwelling secured bridge consumer loan (house won't sell) and a commercial loan secured by an apartment complex. The consumer loan payoff is $250,000. The commercial loan payoff is $50,000. The value of the dwelling is $250,000 and the value of the apartments is $400,000. The new loan will only be secured by the commercial property. Should this be classified as a consumer loan or commercial loan?
_________________________
Always learning something new...

Return to Top
Lending Compliance
#1571761 - 06/29/11 07:32 PM Re: Consumer or Commercial Loan? Likes to Comply
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
Since the majority is consumer purpose I say it's a consumer loan. Remember, Regulation Z is purpose driven, not collateral driven.

Now, of course, if it's in the name of a business entity I change my answer. Regulation Z wouldn't apply.
_________________________
My Opinions Only

Return to Top
#1571776 - 06/29/11 07:47 PM Re: Consumer or Commercial Loan? Skittles
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
Does it make any difference that if the customer can't sell the property then he will rent it out and convert the shop in the back to a duplex? Also the loan will be paid back with rents from the commercial property. Also, the customer is a building contractor. Does any of this make a difference?
_________________________
Always learning something new...

Return to Top
#1571857 - 06/29/11 08:54 PM Re: Consumer or Commercial Loan? Likes to Comply
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
bump
_________________________
Always learning something new...

Return to Top
#1571862 - 06/29/11 09:02 PM Re: Consumer or Commercial Loan? Likes to Comply
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I don't think your 2nd post factors are an issue right now. As Skittles stated, the majority of the loan is for a consumer purpose. Therefore, this is a consumer purpose loan.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top

Moderator:  Andy_Z