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?