HPML with Primary Residence

Answered by:

Question:

A $29,000 loan was made to a customer secured by his primary residence. A $119,000 loan was made to the same customer secured by business property. Another $25,000 loan was made to the same person secured by a mobile home. He is requesting to renew all three loans plus an additional $3,000. Would HPML come into play since his primary residence would be used? Reg Z and RESPA would not apply since the majority of the loan is business related, correct?

Answer:

The primary purpose is not defined in the regulation of which I am aware. Some do use the 50/50 rule, others look at the actual purpose of the refinancing. If the $3,000 requested is for a consumer purpose, then in my opinion the primary purpose of the refinancing was for a consumer purpose and would be treated as a consumer loan.

First published on BankersOnline.com 12/06/10