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#1775990 - 01/14/13 05:38 PM Commercial Loan also secured by primary residence
ars86 Offline
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Joined: Jan 2013
Posts: 13
We have a commercial purpose loan and we also mortgaged the primary residence of the buyer. Do we need to escrow for the residential property? And would rescission apply in this case? The primary purpose of the loan was for business purposes.

Thank you for any help.

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Lending Compliance
#1776020 - 01/14/13 06:36 PM Re: Commercial Loan also secured by primary residence ars86
raitchjay Offline
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Joined: Oct 2009
Posts: 8,408
OK
Both the HPML escrow and rescission provisions reside in Reg. Z. If your loan meets the business purpose exemption found in Reg. Z, then none of the requirements of Reg. Z apply, including those.
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#1776108 - 01/14/13 08:50 PM Re: Commercial Loan also secured by primary residence ars86
lovinglife Offline
Junior Member
Joined: Jan 2013
Posts: 27
Midwest
Someone having the same question....this is great!! We have a similair situation, but one additional question we have is how can we combine three commercial loans that are business purpose secured by primary resisdence into 1 loan? Do we have to do a refinance?

Any help/suggestions would be greatly appreciated!

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#1776667 - 01/16/13 12:47 AM Re: Commercial Loan also secured by primary residence lovinglife
Kaos Offline
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Kaos
Joined: Dec 2002
Posts: 130
How about in a situation where the customer wants to refinance their residence as a commercial loan? The business and the home reside separately on the same unsubdivided lot. Commercial "purpose"? Could this be done to avoid HPML, escrows, etc.

HMDA is a given.

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#1776765 - 01/16/13 03:07 PM Re: Commercial Loan also secured by primary residence ars86
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 46,232
Bloomington, IN
The purpose of the loan dictates whether the loan is for a business or consumer purpose. Under 1026.3 and its Commentary determining the "true" purpose of the loan is a responsibility of the lender.

Processing a consumer purpose loan as a business loan to a avoid regulatory requirements is a no-no and will carry severe penalties.
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The opinions expressed are mine and they are not to be taken as legal advice.

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