The Overlooked Laws That Apply To Business Purpose Loans
By Nema Daghbandan, Melissa Martorella and Victoria Wyatt ( April 4, 2019, 3:17 PM EDT) -- Business purpose loans are nontraditional mortgage loans where a borrower uses loan proceeds for a nonconsumer purpose. A nonconsumer purpose means any loan in which the proceeds are not primarily used for personal, family or household use. There is a common misconception that the primary question in making these loans is whether the property used as collateral is "owner-occupied." But, the more important question is whether the loan's purpose is truly a "business purpose," rather than "consumer" in nature. The purpose of the loan is the decisive factor in whether the loan is exempt from most federal consumer protection regulations. Simply put, if a loan is correctly classified as "business purpose," it is subject to far less regulation at the federal level....
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