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#1989215 - 01/16/15 02:27 PM Consumer or Business Purpose
Dutch Offline
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As you know, credit extended to acquire, improve, or maintain rental property (regardless of the number of housing units) that is non-owner occupied is deemed to be for business purposes under Regulation Z.

That said, if an applicant is getting a mortgage to purchase a house that they absolutely will not live in or use themselves in the coming year, BUT a family member will be living in it rent free (e.g. they are buying a house and are going to let their son live there rent free), would the loan be considered a consumer loan under Regulation Z since the proceeds are being used for personal, FAMILY, or household use? In other words, would the Reg. Z exemption mentioned at the beginning of my question apply to this transaction or not?

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#1989218 - 01/16/15 02:36 PM Re: Consumer or Business Purpose Dutch
raitchjay Online
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OK
Originally Posted By: Dutch
In other words, would the Reg. Z exemption mentioned at the beginning of my question apply to this transaction or not?


It would not be exempt, no.
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#1989229 - 01/16/15 03:00 PM Re: Consumer or Business Purpose Dutch
Skittles Online
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I agree with raitchjay - this is a consumer loan.
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#1989232 - 01/16/15 03:12 PM Re: Consumer or Business Purpose Dutch
John Burnett Offline
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Agree. The key to the answer is the fact that the exception pivots on the rental aspect of the property. Rental as in income, which suggests it's a business acquisition. In your example, though, there is no income expectation, and there's no rental aspect to the property. So the exemption isn't available.
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#1989265 - 01/16/15 04:03 PM Re: Consumer or Business Purpose John Burnett
Dutch Offline
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My thoughts exactly. It's been a recent topic of discussion here, so I wanted to double check to be sure. Thank you all!

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