I'm reviewing a loan in which it is a refi for a woman who owns a Scorp and is wanting to consolidate debt. Part of the security interest is 56 acres of vacant land. The other part is a condominium unit (3 units) that she uses for her business partially I believe. The loan was paid off to consolidate business and personal debts. In addtion, a lump sum from the equity was disbursed to her checking that is used to pay "business" expenses. When looking at this, is this subject to RESPA? Is this a business purpose or personal? on the closing docs the loan officer stated it was personal. Should I go ahead and take him at his word? What other considerations do I need to consider? I'm really really new at this so I'm sorry if this seems obvious to all you lenders out there.

If more than 50% of the loan proceeds were for business purposes, then you would have a business loan. However, a loan can be for personal reasons and secured by business assets. In that case it is personal. I would look to how the majority of the money was used. Business or personal.

The true purpose of the loan dictates, not what the loan officer says.