A customer is refinancing an existing loan.

The $100,000 loan will include $80,000 cash out, $40,000 of which will be used to pay off a credit card that was used for expenses incurred to remodel a rental property. The remaining $40,000 will be used to remodel the customer's kitchen(1/2 business and 1/2 personal).


The collateral is mixed use with the customer living upstairs and parking in the basement, but renting the downstairs portion to a tennant for retail space. The upstairs living area and the downstairs retail rental are about the same size, but since the customer is also using the basement, the property is primarily residential.



Would this be subject to Reg Z and RESPA disclosures?

Also, approximately 1/3 of the borrower's income is derived from the rental of the retail space in the downstairs portion of the collateral.

Whevever you have a multiple purpose and like in this case, the majority of the funds are split evenly, it is always best to provide the consumer disclosures... additional, the unused $20k will be available for the borrower's personal use .. I would provide disclosures.

The $20,000 is simply to pay off the existing loan on the property.