[tashabeads]

I have a situation where the customer is applying to buy a farm that has a pretty nice house on it. The property has about 50 acres. The house and the acreage each attribute about 50% of the value of the property. The borrower is a farmer, but she also has a full time job. Approximately half of her income comes from farming and half from her job. This type of loan hasn’t really been an issue before since it wouldn’t have been covered by RESPA. Now it’s in that grey area. Would you call it a consumer loan and follow TRID rules, or would you call it an ag loan and treat it like any other commercial loan?

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[rcooper]

As you have clearly stated, you must look to the primary purpose of the loan to determine if it is covered. If the purpose of the loan is both consumer and agricultural with neither primary over the other, I would take the conservative approach and treat it as a consumer loan in order to avoid any issues later on. (See the commentary below.)

1026.3(a) Business, Commercial, Agricultural, or Organizational Credit
1. Primary purposes. A creditor must determine in each case if the transaction is primarily for an exempt purpose. If some question exists as to the primary purpose for a credit extension, the creditor is, of course, free to make the disclosures, and the fact that disclosures are made under such circumstances is not controlling on the question of whether the transaction was exempt.

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