Builder Loans: Mortgage or Commercial Loan

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Question:

I am a commercial banker working for a thrift. I process builder loans (specs). The mortgage lenders want to process these as a "mortgage" loan. What written material can you give me to prove to them it is a commercial loan?

Answer:

If the borrower is a corporation or some other business entity and the purpose of the loan is "working capital", then you will find exemptions in many of the consumer protection regs. The flood insurance regs and general prohibitions about credit discrimination will apply fully.

First published on BankersOnline.com 09/16/02