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Business Purpose and TRID Rules

Question: 
We have a customer who wants to finance the construction of a barn on his homestead property. The loan officer says this is business purpose because the customer will have a horse operation in the barn and earn additional income (he has a full time job). I disagree and believe TRID applies. Which do you think it would be and why?
Answer: 

by Dan Persfull:

If the true purpose is to construct the barn to operate a business out of then I would agree with the loan officer.

From 1026.3:

8. Agricultural purpose. An agricultural purpose includes the planting, propagating, nurturing, harvesting, catching, storing, exhibiting, marketing, transporting, processing, or manufacturing of food, beverages (including alcoholic beverages), flowers, trees, livestock, poultry, bees, wildlife, fish, or shellfish by a natural person engaged in farming, fishing, or growing crops, flowers, trees, livestock, poultry, bees, or wildlife. The exemption also applies to a transaction involving real property that includes a dwelling (for example, the purchase of a farm with a homestead) if the transaction is primarily for agricultural purposes.

Answer: 

by John Burnett:

I agree with Dan, but will add that if the barn were being added as a place to stable horses used by the borrower and his family for their own riding pleasure, or as a hobby, I'd call it a consumer-purpose transaction. But if it's to be used for income as described by the loan officer, it's an ag-purpose loan, even if the borrower loses money on the business.

First published on 10/09/2016

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