Answer:
Answer by Jim Bedsole:You know the initial advance from the HELOC will be used to renovate non-owner occupied rental property, but what about later advances which may or may not be for consumer purposes? If the line is going to be in an individual's name (not an LLC or some other type of entity), and because it's secured by the primary residence, I'd recommend treating it as consumer and giving the right of rescission at the outset. This will prevent you from having to give future rescissions every time the customer wants an advance that will be for consumer purposes.
Answer:
Answer by Dan Persfull:A loan to purchase, improve or maintain a non-owner occupied rental property is exempt from the provisions of Reg Z. If this line is being established primarily for business purposes it is exempt even if it may occasionally be used for consumer purposes. See 226.3(a)(2): A business account used occasionally for consumer purposes.
First published on BankersOnline.com 8/28/06
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