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It is my understanding that if any part of the property being financed will be used for the borrower’s primary residence, then TRID applies. This is causing us a lot of trouble–especially with the appraisals. We have had two such loans where the property being purchased required a commercial appraisal. This generally requires bids, and it is hard to comply with the 3 day disclosure requirements (with accuracy). I know the TRID determination flow chart you provided the group starts off with determining whether Reg Z applies. In both cases I would say the transaction IS “primarily” for business, commercial or agricultural; based on revenue stream and/or potential rental income. Can that trump the fact that 10% of the property will be used for the primary residence of the borrower(s)? Would it make a difference if it were 45% used for residence? The borrower will be a natural person.
In order to determine if TRID applies, we first have to determine if Reg. Z applies. As you mentioned in the Reg. Z flowchart, if a transaction is primarily business, commercial, or ag. purpose then the transaction is not covered by Reg. Z. That determination is sometimes a fine line; however, you stated that based on revenue stream and/or potential rental income the transactions were primarily for business, comm., ag. purpose; therefore, Reg. Z would not apply and TRID would not apply. There is no specific percentage requirement in the regulation; however, “primarily” typically means greater than 50%. You have to walk through the Reg. Z coverage rules first before you move on to whether or not you have a TRID transaction.
Of course, TRID applies any time you have closed-end consumer transaction secured by real property which can sometimes mean there is no residence involved. It could just be a closed-end consumer credit transaction secured by land. Key is to walk through Reg. Z flowchart first, then the TRID flowchart. Let me know if you have additional questions.
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