The loan I am reviewing is secured by a house purchased by parents for their daughter. This has been treated as "business purpose," and therefore not subject to the usual consumer disclosure requirements. Under what circumstances should this be treated as a business loan? Does it matter whether the daughter is paying them rent, other than making the loan payments?

Who owns the property? If the parents are the only owners then it could be treated as a rental purchase transaction. The person they are renting to and how much they are charging for rent is not a factor. If the daughter's name is also on the deed then you have a consumer purchase transaction.

FWIW, I agree 100%.