Loan for debt consolidation to an individual on a one-four family residential dwelling now used as rental property by the borrower. RESPA?

A rental unit is not subject to RESPA regardless of the purpose.

Nor is it subject to Z, but don't forget to do a flood zone determination.

CORRECTION: I misread the orginal post. The purpose of the loan is consumer (debt consolidation) so Z will apply and RESPA will also, unless the consolidation of debt is business debt.

I agree with Dan. And, the Kirchman manual states "a loan secured by a rental property having a consumer or personal purpose is not exempt, and RESPA applies."

JanDan, I have to disagree with your statement.

§3500.5: Coverage of RESPA (04/01/97)

(a) Applicability. RESPA and this part apply to all federally related mortgage loans, except for the exemptions provided in paragraph (b) of this section.

(b) Exemptions.

(2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by Regulation Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining whether the exemption applies.

(this does not appear to be a business purpose loan, it appears to be consumer pupose loan secured by business assest)

§3500.2: Definitions (04/01/98)

Federally related mortgage loan or mortgage loan means as follows:

(1) Any loan (other than temporary financing, such as a construction loan):

(i) That is secured by a first or subordinate lien on residential real property, including a refinancing of any secured loan on residential real property upon which there is either:


If there is a separate exemption for "rental" property regardless of the purpose, I don't remember seeing it.

I agree - unless the debt being consolidated is business debt, the loan is consumer purpose and is subject to both Reg Z and RESPA.

Looks like this has been taken care of, but I thought I would throw in my 2¢ worth. RESPA and TIL are purpose driven. The collateral is secondary. If this is a consumer purpose loan, it is subject TIL. If it is also secured by 1-4 family dwelling, it is also subject to RESPA. There are other exceptions, but it looks like this loan is subject to both.

Thanks for the information.