Reg Z – How should the Purpose field be completed on the Loan Estimate?

Compliance > Regulation Z - TILA / TRID Specific > Loan Estimates
Q:  How should the Purpose field be completed on the Loan Estimate?
 
A:  Regulation Z has very technical requirements for the completion of the Purpose field.  While creditors should review regulatory conditions and commentary, a general description of the requirement is as follows: 
 
  • If the credit is to finance the acquisition of the identified property, the credit shall be disclosed as a “Purchase.”
  • If the credit is not for a purchase… and if the credit will be used to refinance an existing obligation that is secured by the identified property, the credit shall be disclosed as a “Refinance.” 
  • If the credit is not for a purchase or a refinance… and if the credit will be used to finance the initial construction of a dwelling on the identified property, the credit shall be disclosed as “Construction.”
  • If the credit is not for a purchase, refinance or construction… the credit shall be disclosed as a “Home Equity Loan.”
 
 
ADDITIONAL INFORMATION – The regulatory citation for addressing this topic can be found in 12 CFR 1026.37(a).  This was also discussed in the CFPB's October 1, 2014 webinar - Completing the Loan Estimate, which may be found here - http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 

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