Posted By: Likes to Comply
Consumer's Stated Purpose - 10/18/13 03:47 PM
A loan on our books for some time was originally for the purchase of rental 1-4. At the recent refinancing of the loan, the customer stated on the application that the purpose was to refinance their primary dwelling.
The loan was refinanced as a commercial loan because department personnel feel that the original purpose of the funds was to finance a rental purchase and that the original purpose hasn't changed, just the use of the collateral. I understand that reasoning, but…
Wouldn't the customer's stated purpose override the original purpose of the loan being refinanced?
What about the converse…if a customer refinances a loan where the original purpose was to purchase a primary residence, but years later when refinancing the loan indicates the purpose is to refinance rental property - no new money; is it still consumer purpose?
The loan was refinanced as a commercial loan because department personnel feel that the original purpose of the funds was to finance a rental purchase and that the original purpose hasn't changed, just the use of the collateral. I understand that reasoning, but…
Wouldn't the customer's stated purpose override the original purpose of the loan being refinanced?
What about the converse…if a customer refinances a loan where the original purpose was to purchase a primary residence, but years later when refinancing the loan indicates the purpose is to refinance rental property - no new money; is it still consumer purpose?