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Family Trust Considered Non-Natural Person? Reg Z

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Question: 
Is a family trust still considered a non-natural person for purposes of Reg. Z? Trying to determine if we can still use this exemption on a closed-end refi of a owner-occupied single family residence (owned by a family trust).
Answer: 

It depends on who the borrower is. If the borrower is a natural person and the home is owned by the trust, the loan will be subject to Regulation Z. If the borrower and the owner are the trust, and the natural person is a guarantor, the loan can be considered made to other than a natural person, and will not be subject to the regulation. Just be certain that the trust is not a "land trust." That sort of trust has been determined to be an exception to the rule, and if the borrower is a land trust, Regulation Z will apply.

If you're in doubt about the type of trust you're looking at, consult bank counsel.

First published on 09/23/2013

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