Customer is purchasing mobile home to put on land he already owns. He is paying $25,000.00 down and financing $24,250.00. If we choose purchase money, this will produce a seller type of LE & CLOD. Is there a better description for the purpose of credit when the disbursement will be to a mobile dealer and not to purchase land?

I assume you are also taking the land as collateral???

Yes

IMHO - It would be a purchase since he currently owns it free and clear.

The purpose that you have to disclose under 1026.37(a)(9) and 1026.38(a)(5)(ii) relates to what's happening with the land securing the loan. In this case, it's already owned by the borrower. If there is no current mortgage on the land, the purpose you'll disclose will be "Home Equity Loan."

If there is a current obligation secured by the land that will be refinanced as part of the deal, the purpose will be "Refinance."

Those are your choices.

OK - John is correct. Not sure what I was thinking Need more coffee.

rlcarey! "IMHO - It would be a purchase since he currently owns it free and clear."

Oh c'mon Randy! You have no humble opinions. ha ha ha.

I was up an hour earlier than you, Randy. Almost time for lunch here on the right coast.

Well, in this specific case, it was a very ill-advised humble opinion

I know we just had this debate, but I'm gonna chime in since it's on the same topic.

I would clarify that the purpose term you disclose relates to how the credit/loan is used with respect to the land securing the loan and not necessarily what is happening with the land.

I agree with John's response that the term to use in this scenario is Home Equity. Same with the Refinance scenario as presented.

I'll take the Refinance scenario presented though and tweak it a bit....If there is a current obligation secured by the land that will NOT be refinanced but will be paid off by the borrower in the same closing by bringing that cash along with the cash for the down payment on the mobile home, the purpose would be Home Equity.

Or if he doesn't own the land and will be purchasing it BUT will NOT finance the purchase and will instead bring the cash for the full sale price along with the cash for the down payment on the mobile home, the purpose would be Home Equity.

In any of those scenarios, the credit/loan amount and use remains the same...a $24,250 loan used solely to finance a portion of the purchase of the titled mobile home.

Let's not go here again until you get a response from the CFPB. You are going to require them to pay off the lien or your are going to allow yourself to be in second position. Since the payoff will be a requirement of the loan, then it has to be reflected on a revised LE after you get the title commitment and on the closing disclosure and you would have a refinance. You cannot ignore cash being brought to the table at a single closing and if you have a title company that is allowing it, they have a screw loose.

Since the payoff will be a requirement of the loan, then it has to be reflected on a revised LE after you get the title commitment and on the closing disclosure and you would have a refinance. You cannot ignore cash being brought to the table at a single closing

I agree with this statement 100%.

I'll third that.

Glutes,

While I understand and appreciate your logic in arriving at those statements, I can't agree that they reflect the intent of the regulation or that regulators will buy into that logic. We'll just have to agree to disagree.

You might want to refer to 1026.38(j)(4)(ii) also:

(ii) For purposes of this paragraph (j), “closing funds” means funds collected and disbursed at real estate closing.

How silly does it look to make a loan on equity in land-only and it say it's "Home" equity. It just doesn't seem right. LOL!

Received the response. Followed up in the other thread I had created on Purpose.

CFPB doesn't agree with you.

I provided a response in the other Purpose thread. It appears the CFPB bought into my logic.