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#279249 - 11/23/04 11:36 PM split security question!!
Auditjg Offline
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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