$200,000 to request to purchase what was originally a commercial warehouse building, but has been remodeled (by the previous owners) to consist of 40% primary dwelling and 60% warehouse space.

Applicant buyer plans to live in the dwelling portion of the building and run their business through the warehouse.

Applicant (buyer) requests the Bank to fund the purchase with the assistance of an SBA loan, which has a program for owner-occupied business property. The financing would be as follows:

10% down from buyers $20,000
40% SBA separate loan $80,000
Bank loan of: $100,000

Need help with following compliance questions to be sure I understand any disclsoure/compliance obligations:

1. T or F? RESPA does NOT apply because this is not 1-4 family dwelling (not principally for occupancy).

2. T or F? the bank views this is primarily as a business purpose request, therefore Reg. Z will NOT apply.

3. T or F? HMDA would NOT apply because the dwelling does not meet the 50% test for mixed use building.

Thanks in advance for any responses!

Your mixed-use test result sounds logical; thus i think neither Reg. Z, RESPA, nor HMDA would apply (although i would add that i'm not entirely sure how RESPA would define a "dwelling"...i think the part that would make RESPA not apply for me is that RESPA uses Reg. Z's business purpose test and this loan would seem to satisfy that test).

The RESPA piece is at 1024.2(b)(1)(i)(A) under the federal related mtg loan header.

Business purpose so no Z or RESPA, no HMDA due to primary commercial use.

If the property secures the loan, a flood check is necessary.

And the appraisal disclosure since the property includes a 1-to-4 family residence?

I have heard that these kinds of buildings are difficult to provide loans to, due to appraisal problems not finding suitable comparables. What are your thoughts on this? If it's true, how does one get around the problem?

What I did not mention in my original post was that ten years ago our lender warned the couple that remodeled a portion of the warehouse into their primary dwelling, that this would be difficult to sell when the time comes. Well the time has come and the first set of people looking at property are having trouble getting conventional (30-year financing). So the owners have asked us if there was some creative financing we could provide to potential buyers (see above's example with the 40% SBA piece).

As far as Cornhuiskers question: Do you agree that we would need to provide the appraisal disclosure in the event we eventually get a applicant for this deal?

I am no expert here and I defer to the old heads here for their opinion.
1. The appraisal disclosure question is in the ECOA bucket.
2. ECOA appraisals apply to commercial and consumer loans secured by 1st lien on a "Dwelling". So what's a Reg B Dwelling?
3. Reg B says it's a 1-4 unit structure. (simplified def.)
4. Seeing that Reg B covers both business and consumer purpose loans, I can't see getting around the appraisal requirement here because there is indeed a dwelling there. Reg B doesn't delineate any percentage use of the structure, so I would conclude you need to comply with Reg B's appraisal rules.
You smart folks, is that a pretty fair assessment?

That makes sense to me. Further, it's such an easy regulation to comply with and doesn't cost anything additional that I don't see why you wouldn't want to in this situation.