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#2220264 - 08/22/19 07:29 PM TRID loans with collateral owned by a business
KMenard Offline
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We have a loan application for a customer (individual) to purchase a house that will be secured by the house being purchased and by another house that is owned by an LLC. Our LOS system will not allow the property owned by the LLC to be on this loan. We have reviewed the setup in the LOS system and we have selected to allow commercial guarantor or commercial hypothecator entities on consumer transaction.

Can property owned by an LLC be used as collateral on a consumer loan that is subject to TRID? If may just be our LOS but the vendor is saying that TRID does not allow business owned real estate property to be used on a consumer loan.

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#2220281 - 08/22/19 10:03 PM Re: TRID loans with collateral owned by a business KMenard
crcmnot Offline
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We just had this exact scenario; consumer purpose TRID loan to an individual to purchase his primary residence. Collateral was residence being purchased AND an investment property owned by an LLC that he (and another partner) is a member of; reason was to get LTV at/below our guidelines. Our LOS had no issues with investment property being held as collateral.

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#2220285 - 08/22/19 11:05 PM Re: TRID loans with collateral owned by a business KMenard
rlcarey Online
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rlcarey
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Galveston, TX
Sounds like an LOS problem to me also. TRID nor the Federal regulations care who owns anything - it is all purpose driven, i.e., a consumer loan purpose secured by real property.
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#2220302 - 08/23/19 01:45 PM Re: TRID loans with collateral owned by a business KMenard
Dan Persfull Offline
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Bloomington, IN
the vendor is saying that TRID does not allow business owned real estate property to be used on a consumer loan.

This is definitely a vendor issue and sounds like you may need to move the issue up a couple of rungs in the vendor's support ladder system.
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#2220304 - 08/23/19 02:27 PM Re: TRID loans with collateral owned by a business KMenard
Inherent_Risk Offline
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I like to blame things on TRID too smile. Ask for a citation.

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#2242239 - 09/10/20 01:51 PM Re: TRID loans with collateral owned by a business KMenard
Compliance504 Offline
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Posts: 727
Tennessee
I'm reviewing a loan originated through our commercial dept as a commercial loan for HMDA reporting....

It is secured by a rental property with the funds being used for the down payment on a primary residence being purchased through our mortgage dept.....the loan will be paid off with proceeds from the sale of the rental property....

This is clearly a consumer purpose loan...not business purpose....I'm not a TRID guru by any means.....

Where are we in trouble with this loan and can we fix anything?

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#2242240 - 09/10/20 01:55 PM Re: TRID loans with collateral owned by a business KMenard
rlcarey Online
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rlcarey
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Galveston, TX
Failure to disclose means you compare all closing costs to $0 - since there was no LE. You then need to cut them a check.
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#2242241 - 09/10/20 01:57 PM Re: TRID loans with collateral owned by a business KMenard
Compliance504 Offline
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Posts: 727
Tennessee
Thanks so much Randy.....I'll pass this along....

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#2243864 - 10/09/20 04:54 PM Re: TRID loans with collateral owned by a business KMenard
IronP2717 Offline
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I have a similar loan to the examples above. Need to confirm consumer RE regs apply (RESPA, TRID, HMDA).
Loan for a business entity to refi land and construct a second home for the business owner. This is not temp financing.

I don't see anyway around TRID disclosures and think it's HMDA reportable now b/c we're only doing 1 loan. Not temp financing and then doing a perm loan.

thoughts? confirmations?

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#2243867 - 10/09/20 05:03 PM Re: TRID loans with collateral owned by a business KMenard
Skittles Offline
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TN
Is the loan in the name of the business or an individual?
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#2243873 - 10/09/20 05:42 PM Re: TRID loans with collateral owned by a business KMenard
IronP2717 Offline
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it's in the name of the business, but for the individual. Home is 75% living space.

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#2243874 - 10/09/20 05:58 PM Re: TRID loans with collateral owned by a business KMenard
rlcarey Online
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rlcarey
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Galveston, TX
It is exempt from Regulation Z, but RESPA would apply if you think that a business can actually get a loan for consumer purposes.
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#2243879 - 10/09/20 07:05 PM Re: TRID loans with collateral owned by a business rlcarey
IronP2717 Offline
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I'm sure I'll regret asking, but Randy, can you explain what you mean?

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#2243880 - 10/09/20 07:12 PM Re: TRID loans with collateral owned by a business KMenard
rlcarey Online
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rlcarey
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Galveston, TX
Unlike Regulation Z, there is no exemption in RESPA for a loan made to a business. RESPA only exempts business purpose loans.

Whether a business entity can borrower for a consumer purpose - is a long argument that has been hashed over lots on time in the threads
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