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#279249 - 11/23/04 11:36 PM split security question!!
Auditjg Offline
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Auditjg
Joined: Sep 2004
Posts: 67
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.

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Lending Compliance
#279250 - 11/24/04 02:42 AM Re: split security question!!
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,016
Bloomington, IN
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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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