We have a customer refinancing $85,000 on his primary residence and taking $120,000 in new money to construct a rental house. HMDA will apply, correct? But do we treat this as a commercial loan, or will RESPA, ROR, and Reg Z apply? It's a twenty-five year term.

Personal opinion: I would play it safe and treat the entire loan as a consumer loan and as a HMDA-reportable cash-out refi. It is certainly true that the $120K in new money is for a business purpose and since the majority of the proceeds are for a business purpose, therefore the whole loan could be a business purpose. But what are you saving yourself by taking that approach vs. the potential risk involved?

It sounds like you're structuring this as a consumer-type loan (25 year term) so what are the reasons for not treating it as a consumer loan? I could understand if the loan officer wants to structure this in some sort of wierd way that the consumer servicing system can't handle, but that's not coming across in your question.

Any help?

Yes. Exactly what I needed. Thank you!