Answer:
Regulation Z applies to loans for rental property as follows:
If the property is non-owner occupied (14 days or fewer per year) and the purpose is to acquire, improve, or maintain the property, the loan is considered business purpose and is not covered by Regulation Z.
If the property is owner occupied (more than 14 days per year) and the loan is to acquire a property with 1 or 2 units, the loan is considered consumer credit and Regulation Z applies. If there are more than 2 units the loan is considered business credit and is exempt from Regulation Z.
The number of units changes the answer if the loan is to improve or maintain the property. If the property is owner occupied (more than 14 days per year) and the purpose is to improve or maintain the property, 1 to 4 units are considered consumer credit which is subject to Regulation Z. If the property has more than 4 units it is considered business credit and is exempt from the Regulation.
First published on BankersOnline.com 3/19/01
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