We made a line of credit to a borrower to build a new primary residence, but we secured the loan by his horse farm (owned free & clear) where he currently lives (which is also his primary source of income.) We are refinancing that line of credit into a 30-year mortgage to the individual, but still secured by the horse farm (not the new primary residence.) Since our mortgage will pay off a line of credit that was originally for a consumer purpose (but secured by commercial property), would we consider the refinance subject to TRID? The MLO wants to treat it as a commercial loan, not subject to TRID but as the original purpose of the loan being paid off was consumer, shouldn’t it be subject to TRID?

I would say yes to TRID if it were my shop:

1) Consumer purpose - yes
2) Closed end - yes
3) Secured by real property - yes

You may not have some of the RESPA or HPML rules to worry about necessarily but it sure looks like you're on the right track requiring TRID, in my opinion.

That's what I thought - thank you for the response!!

What angle is the loan officer trying use that this is a business purpose loan? The loan's purpose, not the collateral, determines if it is business or consumer purpose.

Three basic factors determine whether a closed-end mortgage loan is subject to Reg Z and TRID requirements. First, the borrower is an individual. Second, the loan is to be used primarily for personal, family, or household purposes. That makes it subject to Reg Z. Third, the loan is or will be secured by real estate and it is subject to the TRID rules. If the first two requirements are met, it does not matter what the real estate is. It could be a traditional residential home, a horse farm, a 100-acre cornfield, undeveloped land, or a multi-billion dollar skyscraper in Lower Manhattan.

In this case, it's a horse farm. But the borrower is an individual and the loan will be used for personal, family or household purposes. So the loan is subject to Reg Z and TRID rules notwithstanding the use of the collateral.

Lenders who think otherwise need retraining or a different line of work.

Thank you!