Consumer or Commercial Loan?

Posted By: Likes to Comply

Consumer or Commercial Loan? - 06/29/11 07:28 PM

The loan is to payoff/combine a dwelling secured bridge consumer loan (house won't sell) and a commercial loan secured by an apartment complex. The consumer loan payoff is $250,000. The commercial loan payoff is $50,000. The value of the dwelling is $250,000 and the value of the apartments is $400,000. The new loan will only be secured by the commercial property. Should this be classified as a consumer loan or commercial loan?
Posted By: Skittles

Re: Consumer or Commercial Loan? - 06/29/11 07:32 PM

Since the majority is consumer purpose I say it's a consumer loan. Remember, Regulation Z is purpose driven, not collateral driven.

Now, of course, if it's in the name of a business entity I change my answer. Regulation Z wouldn't apply.
Posted By: Likes to Comply

Re: Consumer or Commercial Loan? - 06/29/11 07:47 PM

Does it make any difference that if the customer can't sell the property then he will rent it out and convert the shop in the back to a duplex? Also the loan will be paid back with rents from the commercial property. Also, the customer is a building contractor. Does any of this make a difference?
Posted By: Likes to Comply

Re: Consumer or Commercial Loan? - 06/29/11 08:54 PM

bump
Posted By: David Dickinson

Re: Consumer or Commercial Loan? - 06/29/11 09:02 PM

I don't think your 2nd post factors are an issue right now. As Skittles stated, the majority of the loan is for a consumer purpose. Therefore, this is a consumer purpose loan.