I am a credit analyst, but no not have anything to do with consumer residential real estate mortgages. Our bank has a separate department that handles all of the consumer real estate.

With that being said, one of our commercial customers (contractor) brought in one of his clients to get a construction note on his current personal primary residence. They have owned and lived in the house for over a year and are doing a major renovation. They currently have a mortgage on the property.

Our construction note will take out the current mortgage with additional funds for the remodel.

My question is this, is this construction loan subject to the new consumer real estate regulations and requirements?

It sounds like a consumer purpose loan to me, so yes. We have a strict policy that consumer loans are not to be handled by the commercial department. If the commercial customer brought in the client to the commercial LO, that LO should direct the applicant to the residential lending department. In my experience, commercial lenders do not understand the requirements of consumer regulations.

Regardless of the avenue by which it reached your bank, this is a 100% plain vanilla consumer loan.

Although there are currently no actual 'new' consumer RE regs/and requirements, this will be subject to consumer regulations, at a minimum Regulation Z.

Whether it's exempt from certain disclosures and/or reporting requirements, or not, will depend on whether it meets any temporary loan exemption or not.

Thanks everyone.

BTW--good catch!! By raising this question you may have saved your bank a big headache and possibly penalties.

It's always cheaper to do it right the first time!