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#2287400 - 08/04/23 09:15 PM Loan to LLC for Home Improvement
Wonderofitall Offline
100 Club
Joined: Sep 2010
Posts: 202
Out West
Borrower wants his LLC to borrow money for home improvement. The purpose of the $ is a consumer purpose. I'm sure the borrower's idea came from our LO. Comment 9 to 1026.3(a)(2) seems to read that this loan is exempt from Reg. Z's disclosure and rescission requirements. Am I reading this correctly?
You're never too old to learn something stupid.

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#2287403 - 08/04/23 09:42 PM Re: Loan to LLC for Home Improvement Wonderofitall
rlcarey Online
10K Club
Joined: Jul 2001
Posts: 82,509
Galveston, TX
A consumer loan to a business entity is subject to RESPA and a GFE and HUD-1. If this was the LO officer's idea, he should be fired for attempting to give legal advice to a borrower. Under what circumstances would a business entity improve a consumer's house? How are they ever going to account for such a transaction in the business records? Nothing like piecing the veil of the legal entity and thus destroying any protections afforded to the consumer, as the legal entity is no longer separate from themselves.
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#2287406 - 08/04/23 09:57 PM Re: Loan to LLC for Home Improvement Wonderofitall
Andy_Z Offline
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Joined: Oct 2000
Posts: 27,738
On the Net
I don't care for the tactics of the LO either.

Let's assume it's a small 1 person LLC and says "well it's just me anyway so what's the difference?"

A. The borrower gets into financial trouble. Talks to his attorney and says the mortgage is really hurting him. Had he known the terms from a consumer perspective he'd never have done this, but the LO recommended it. UDA(A)P!
B. The LLC prospers and he can sell it and get out, except for the mortgage debt. So he go's back to his attorney and we repeat A.

He is essentially taking away the consumer's rights.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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