I am trying to figure out if Reg Z and/or RESPA apply to the following loan:

Two year - $50,000.00 loan to a consumer for debt consolidation (consumer purpose)secured by 640 acres of farm ground with two dwellings that are not owner occupied nor are they rentals. One is vacant and the other is occupied by the borrowers mother (rent-free).

Do we need to have the borrower complete a 1003 application and collect Reg B monitoring information? Is it subject to Reg Z & RESPA?

Any help would be greatly appreciated.

Thanks!

Due to the acreage RESPA does not apply. Reg Z applies because it is secured by real property, assuming the debt consolidation is primarily for consumer debt and not business debt.

The 1003 is only a requirement of the secondary market.

Whether this is HMDA or not depends on if the loan meets the definition of a refinancing, otherwise it will not be.

BTW, don't forget your flood requirements.

Thanks Dan! The debt consolidation is consumer debt. The reason we would use the 1003 is for collection of Reg B monitoring information as we are not subject to HMDA. But I don't believe we need to collect the monitoring information on this loan. What under Reg Z would apply other than the Fed Box? Do we need to give an early TIL?

No, an early TIL (Section 226.19) is not required because it only applies when the loan is to purchase the applicant's primary dwelling, which does not sound like it fits your situation.

You may, however, want to consider providing an Itemization of Amount Financed (226.18(c)). While the footnote and Commentary to this section generally exempt the need to give the Itemization if a GFE and HUD-1 are furnished, the language in those sections states that it applies for "transactions subject to RESPA." Since your transaction is not subject to RESPA (being exempt due to acreage), it could be interpreted that the Itemization is required even if you voluntarily provided a GFE and HUD-1, since the transaction is not "subject to RESPA."

Reg. B government monitoring information is only required if the application is to purchase or refinancing the applicant's primary dwelling, so it would not appear to apply in your transaction.

My answers above are based on the assumption that your loan is closed-end credit (not a line of credit) and that the borrower's mother (who lives on the property) is not also a borrower.

________________________________

The opinions expressed are mine and do not represent that of my employer. My opinions should not be taken as legal advice.