Hello all
I have a loan that is secured by multiple properties. The Properties are primarily taverns with apartments overhead. One of the apartments is occupied by the account owner. The purpose of this loan has been classified as personal. There is a rate spread of 1.55%. Would HPML apply to this and thence the escrow rules?
Thanks for your help.

Taverns downstairs? How do I get one of these apartments!?

How did you arrive at a consumer purpose if the properties are primarily taverns? What is the loan purpose? Is it the borrower's principal dwelling? Is it a jumbo loan?

If they own the 'apartment' and it's their PR and the purpose is consumer, then I would say yes.

ETA: I want one too!

Under RR's assumptions I would say yes too. And of course we have to assume it is a first lien. If it is a subordinate lien, the threshold is 3.5% so it would not be a HPML.

Also, if it's a jumbo loan the threshold goes up to 2.5% for first liens, so it would not be a HPML.

This is a good question.

I've looked at 1026.2(a)(19)&(24) and their Commentaries, the Commentary to 1026.3(a)(5) and 1026.35 and its Commentary.

Unless I overlooked it no where in these sections did I find that a consumer's principal dwelling is limited to a 1-4 family dwelling.

It is my opinion the regulation did not intend to include the type dwelling you are referring to but I cannot point you to anything in Reg Z that would exempt it if this loan is a consumer purpose loan as you state.

I think this would be a good example to run by your examiner.

Thank you all for your input! It is not a Jumbo loan and it is a first lien. However it is purposed as not owner occupied but the processor just told me that the owner and his woman broke up so he is living there now.

You guys don't have apartments over taverns. We have TONS of them. I think we are known in our city for having the most bars per capita in our state though, so if they didn't have apartments over them, where else would people live LOL