I have myself confused and need a little bit of help.

We have a customer who comes to apply for a loan to purchase rental property that will be non owner occupied. (Less than 14 days)

Now the customer is a Pharmacist and this will be their first rental property. Since their primary occupation is not renting property, but is the money they earn from being a pharmacist would this still be considered business purpose?

The commentary of the regulation states:

3. Factors. In determining whether credit to finance an acquisition—such as securities, antiques, or art—is primarily for business or commercial purposes (as opposed to a consumer purpose), the following factors should be considered:

i. General. A. The relationship of the borrower's primary occupation to the acquisition. The more closely related, the more likely it is to be business purpose.

B. The degree to which the borrower will personally manage the acquisition. The more personal involvement there is, the more likely it is to be business purpose.

C. The ratio of income from the acquisition to the total income of the borrower. The higher the ratio, the more likely it is to be business purpose.

D. The size of the transaction. The larger the transaction, the more likely it is to be business purpose.

E. The borrower's statement of purpose for the loan.

But I think this is for purchases that don't include rental property. Is this correct?

Thanks in advance for your help.

Don't overlook this in the Commentary re non-owner occupied rental property:

4. Non-owner-occupied rental property. Credit extended to acquire, improve, or maintain rental property (regardless of the number of housing units) that is not owner-occupied is deemed to be for business purposes. This includes, for example, the acquisition of a warehouse that will be leased or a single-family house that will be rented to another person to live in. If the owner expects to occupy the property for more than 14 days during the coming year, the property cannot be considered non-owner-occupied and this special rule will not apply. For example, a beach house that the owner will occupy for a month in the coming summer and rent out the rest of the year is owner occupied and is not governed by this special rule. ( See comment 3(a)–5, however, for rules relating to owner-occupied rental property.)

I presented a webinar on business vs consumer purpose loans in July. :-)

https://www.bankersonline.com/bankerstor...ojbslhi5r6g0904

So based on this. My example above would be a business purpose loan. Correct?

And I am going to talk to my supervisor about getting this CD ordered. If this is making my head spin, then I know the loan officers are in need of some additional training.

NSF, good call on the training.
If a regulator wants to do a deep drill, they will look for consumer purpose loans booked in the commercial loan department and deposit accounts in the wealth management area. Usually they will find as many mistakes as they have time to write. From experience, most commercial lenders do not believe that any consumer compliance regulations apply to them.

Yes, non owner occupied rental real estate is business purpose. In the webinar I also address non owner occupied provided rent free to family. A different ball of wax entirely.