MLA- Mixed Loan Collateral

Posted By: Banker 1025

MLA- Mixed Loan Collateral - 05/23/17 05:08 PM

Does the Military Lending Act apply to a loan to a consumer secured by a blanket mortgage on a tract of real estate which is improved by the borrower's primary residence AND a second tract of vacant land? Any thoughts would be appreciated. Thank you!!
Posted By: raitchjay

Re: MLA- Mixed Loan Collateral - 05/23/17 05:20 PM

Loans secured by a dwelling are exempt--so i'd say it's exempt.
Posted By: Banker 1025

Re: MLA- Mixed Loan Collateral - 05/23/17 05:27 PM

Thank you! We thought that was the case but that parcel of vacant land in the mix threw us for a loop!
Posted By: Andy_Z

Re: MLA- Mixed Loan Collateral - 05/24/17 05:19 PM

I would agree with raitchjay based on a strict read of the Reg.

If you asked about a car loan being financed with additional monies to payoff a credit card, you wouldn't be able to claim an exemption because funds are also going elsewhere. That exemption is based on "Any credit transaction that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the vehicle being purchased;" and I would emphasize "expressly intended to finance the purchase" whereas the exception you're looking for is based not on funds disbursement, but collateral, "secured by an interest in a dwelling". While some examples are given, I read those as inclusive, not exclisive (as in these are the only qualifiers.)

Exceptions. Notwithstanding paragraph (f)(1) of this section, consumer credit does not mean:

(i) A residential mortgage, which is any credit transaction secured by an interest in a dwelling, including a transaction to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loan or line of credit, or reverse mortgage;