We are doing a loan to a business to purchase a condo unit to be used as a rental. However, the business is going to rent it to the owner of the business to live in.

Normally if rental property is occupied by the owner of the property for more than 14 days, consumer disclosures should be given. In this case, it's not occupied by the business but by the owner of the business.

Are we okay not giving consumer disclosures and doing strictly as a commercial loan?

I assume the business is an actual legal entity? If so, sounds to be totally business to me. If they are actually renting it, they could rent it to anyone.

Yes, it is. Thank you for the quick response.

I've got one where an LLC is getting a loan on a rental property. The LLC has two members signing on the loan personally. The property securing the loan is owned free and clear. The purpose of the funds is to payoff the borrower primary residence. The narrative in the file states they are doing this to replenish their cash reserves. I'm not feelin it. I believe this is a consumer purpose loan subject to TRID disclosure. Talk me off the ledge, please....

You say that you have an LLC getting a loan but two members are signing on the loan personally. You mean the members are guarantying the loan? I am just trying to get my head around the entire situation.

They also say that they are paying off the borrower's primary residence (what borrower) and this is going to replenish cash reserves (who's cash reserves)? How is that possible?

The borrowers on our loan are the LLC, John Doe and Jane Doe. John and Jane are member of the LLC. They are signing the loan personally because the income to repay the loan is from their employment income, the LLC has no income. We are using the funds from the loan, secured by a property owned by the LLC to pay off John and Janes primary residence.

As far as the statement about the cash reserves, I still need to ask the loan officer how that is possible if all the funds from the loan are being used to payoff personal debt the the borrower's have, then what funds are they replenishing (seems to me they are swapping one debt for another). I was trying to tackle the disclosure requirements first.

Well, if the funds are not for the LLC and the LLC offers nothing from a credit underwriting perspective, why is the LLC involved? Just because the borrower wants it that way? It should not work like that. This is a consumer loan from what you have said and I would treat it as such and tell them you do not need the LLC involved. They are trying to play some sort of accounting game here in which the bank does not really need to be involved in.

That was my thoughts! Just was looking for some confirmation that my line of thinking was accurate before telling them this is a TRID loan. Climbing down now.
Thanks!