Here's the situation - a loan is for the purchase of 4 lots, 3 will be sold and one will be the primary residence. I initially thought this would be business purpose because the majority of the lots will be sold, which makes it primarily for business purposes, however since they are purchasing their primary residence I'm not sure. Any thoughts?

Also, has anyone heard of a requirement for the borrowers to sign a "business purpose statement" in order for it to be exempt from Reg Z?

Thanks!

How is the purchase of 2 lots for the purpose of resale a business purpose loan? Unless the borrower is in the business of buying and selling real estate then this is a personal investment loan. Reg. Z does not exempt investment property, it exempts rental property and/or business purpose loans. This loan does not sound like either.

There is no regulatory requirement for a business purpose statement to be signed. Some get it as a precautionary measure, however a business purpose statement alone will not exempt the loan as a business purpose loan. You have to analyze the purpose using the criteria in 226.3 and its Commentary. The lender is responsible for establishing the true purpose of the loan request.

Thanks so much Dan! I had actually "assumed" business purpose, and later asked for more clarification and found out it was investment. You know what happens when you assume....