New Reg Z Rules for Agricultural Purposes

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Question:

On the new Reg Z rules for Agricultural purposes, if we did an ag-purpose loan for say $140,000 or more and we took a 1st on a vacation home on the lake worth about 55,000 as additional collateral, would this loan be exempt from the new disclosures?

Answer:

There are no "new Reg Z rules for agricultural-purpose" loans. Under section 1026.3 of Regulation Z, you determine whether the extension of credit is for a consumer purpose or not. If it's for a consumer purpose, it's subject to the regulation (unless a different exemption applies). If it's an extension of credit for business or agricultural purposes, it's not subject to the regulation. That's been the case for decades.

Put another way, the nature of the collateral (the vacation home in your example) does not change the purpose of the loan, and the purpose of the loan (agricultural or consumer) determines whether the regulation applies.

Because you determined the extension of credit in your example is agricultural, the loan isn't subject to Regulation Z.