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#1998794 - 02/27/15 05:15 PM TILA? for home purchase secured by raw land
CRL Offline
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CRL
Joined: Sep 2003
Posts: 576
Can someone confirm the meaning of this exemption from TILA. Does it mean "any real property" is not exempt? Or does it mean "any real property used as the principal dwelling for a consumer" is not exempt?

I have a loan secured by raw land with cashout to be used for the borrower to purchase a primary residence. Is this loan subject to TILA?


1026.3 Exempt transactions.

This part does not apply to the following:

Effective August 1, 2015, the introductory text above is amended to read as follows:

The following transactions are not subject to this part or, if the exemption is limited to specified provisions of this part, are not subject to those provisions:

(a) Business, commercial, agricultural, or organizational credit. (1) An extension of credit primarily for a business, commercial or agricultural purpose.

(2) An extension of credit to other than a natural person, including credit to government agencies or instrumentalities.

(b) Credit over applicable threshold amount. (1) Exemption. (i) Requirements. An extension of credit in which the amount of credit extended exceeds the applicable threshold amount or in which there is an express written commitment to extend credit in excess of the applicable threshold amount, unless the extension of credit is:

(A) Secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer;
or

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#1998803 - 02/27/15 05:20 PM Re: TILA? for home purchase secured by raw land CRL
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,959
Bloomington, IN
Any consumer purpose loan secured by real property (dirt) is subject to Reg. Z regardless of the dollar amount.

OR

Any consumer purpose loan secured by personal property, such as a boat, car, camper, etc., that is or will be used as the consumer's primary residence is also subject to Reg. Z regardless of loan amount.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1998819 - 02/27/15 05:33 PM Re: TILA? for home purchase secured by raw land CRL
CRL Offline
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CRL
Joined: Sep 2003
Posts: 576
Thank you Dan! Comma usage often confuses me!

So just to confirm, a loan secured by real property that is not a 1-4 family dwelling with proceeds used for consumer purpose IS subject to TILA, regardless of loan amount. But is NOT subject to RESPA, as RESPA is ONLY for FRMT, so only for loan SECURED BY a 1-4 family dwelling, regardless of loan purpose. True?

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#1998823 - 02/27/15 05:43 PM Re: TILA? for home purchase secured by raw land CRL
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,959
Bloomington, IN
The loan would have to be secured by 1-4 residential real property, both a 1-4 dwelling and land, to be subject to RESPA.

So in loan requests such as the one you are questioning can be subject to TILA but not RESPA.

However, keep in mind this all changes on 8-1-15 when the new TILA-RESPA Integrated Disclosures go into effect. At that time any consumer purpose loan secured by real property will be subject to the Loan Estimate and Closing Disclosure.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1998838 - 02/27/15 06:04 PM Re: TILA? for home purchase secured by raw land CRL
CRL Offline
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CRL
Joined: Sep 2003
Posts: 576
Thanks for the quick reply! 8-1-2015 is coming too quickly. I need to study/train. Can you tell me though, will the nonperson borrower exemption in TILA remain?

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#1998840 - 02/27/15 06:17 PM Re: TILA? for home purchase secured by raw land CRL
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,959
Bloomington, IN
I have not seen any proposal to revise that exemption in 1026.3.

However, there will be changes for how Trusts will have to be handled.

http://www.bankersonline.com/regs/12-1026/12-1026-003.html

10. Trusts. Credit extended for consumer purposes to certain trusts is considered to be credit extended to a natural person rather than credit extended to an organization. Specifically:
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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