Regulation Z addresses two type of loans, consumer purpose and business purpose. The word "investment" is not used in Regulation Z. Business purpose loans are exempt from Regulation Z.
Investment can mean a variety of things. A loan that is for investment, would have to be examined under the general business purpose test found in Regulation Z below.
Official Interpretation
3(a) Business, Commercial, Agricultural, or Organizational Credit
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.
As you can see – whether the investment was a piece of art or it was the purchase of real estate, there could be a difference on whether the loan was for a business purpose. If I buy a painting and call it an investment, unless I am in the art business, this would be a personal investment and not a business investment. The same would hold true for someone who had purchased other non-rental property, if they were not actively involved in the business of real estate.
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