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Rule for Investment Purpose Loan

Answered by: 
John Burnett

Question: 
I have a question concerning a loan request by a customer. They will be purchasing a fourplex for investment purposes. After 12 months, the purchaser of the fourplex will move into one of the units and occupy it as a primary residence. Will this loan be considered for investment purposes whereas we do not need to send early TIL and RESPA disclosures? Or will they be required based on the customer residing in one unit after 12 months?
Answer: 

If the purchaser is moving into one of the units at closing or within a year after closing, Regulation Z Comment 3(a)-5 applies, and the loan can be considered primarily for business purposes because it has more than two units. The fact that the purchaser won't be moving in within that one year period doesn't change things. You don't have to comply with TIL or RESPA.

First published on BankersOnline.com 5/23/11

First published on 05/23/2011

Filed under: 
Compliance
Filed under compliance as: 
IT
RESPA

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