Reg Z Partial Exemption for Certain Mortgage Loans

Posted By: Jason Ellis

Reg Z Partial Exemption for Certain Mortgage Loans - 07/30/21 02:32 PM

Does a state DPA bond 2nd mortgage program that is zero interest with a balloon payment due when:
- the property is sold;
- title is transferred;
- home is no longer the primary residence;
- the first mortgage loan is refinanced; or
- the first mortgage loan is paid in full

meet the partial exemption requirements of ยง1026.3(h)(4)?

Assuming it meets all the other requirements of 3(h), I don't think it meets the requirements of (4) because of the criteria of the payment being due when the first mortgage loan is refinanced or paid in full without the property being sold or title transferred. The bond agency believes it meets the requirements of partial exemption and apparently the servicer does also.
Posted By: rlcarey

Re: Reg Z Partial Exemption for Certain Mortgage Loans - 07/30/21 03:31 PM

FWIW - I agree with you.

- the first mortgage loan is refinanced; or
- the first mortgage loan is paid in full

Those are outside of the bounds of the exception.
Posted By: Jason Ellis

Re: Reg Z Partial Exemption for Certain Mortgage Loans - 07/30/21 03:38 PM

Thanks Randy!