I have read the definition of a resdiential mortgage transaction and I am still a little confused. We only make first mortgage residential loans. We do not make second morgtage loans. Loans are made to either purchase or refinance a primary residence, a second home or an investment property ( a rental). So are these loans exempt from Section 226.32 of Reg Z?

You are subject to HOEPA if you make loans secured by the consumer's principal dwelling and the loan falls under either the rate or fee test. There are always exceptions and for HOEPA they are that it applies only to closed-end loans, not open-end lines of credit secured by the consumer's home and it also doesn't apply to purchase money home loans or reverse mortgages. Because it applies only to loans secured by the principal dwelling, it also doesn't apply to second homes or investment property. It does apply to closed-end refinancings if you meet either the rate or fee test.