Is This Loan Subject to the Regs?

Question:

A loan is taken to purchase a single family home that will be owner occupied. The loan is in the name of the borrower's business, a corporation. Is this loan subject to the Regs such as Reg B, Reg Z and RESPA?

Answer:

First you say this home will be owner-occupied, but the loan is to a business. I'm confused. A business cannot occupy a dwelling. It sounds like the business will own the home and the principal (owner) of the business will occupy it. I'm going to proceed with my answer assuming this is true. If not, I would need more information before accurately answering your question.

Second, you must look at every Reg individually, Reg Z and RESPA are consumer purpose regulations. Since the business is the borrower, they do not apply. Reg B applies to this loan as purpose is not a factor for most sections in this Reg (fair lending issues, joint intent and adverse action notice requirements). Flood insurance requirements defiantly apply. HMDA most likely applies as this sounds like a dwelling purchase loan.

First published on BankersOnline.com 4/09/07