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In a consumer purpose real estate loan where a mother died and left the property to a daughter in a will, what would the purpose of the loan be for TRID? The daughter is living in the property as her primary residence and is using the property to get the loan to pay off the mortgage that was in the mother’s name. The attorney is preparing a new deed in the daughter’s name, and the daughter is not on the loan being paid off.
TRID loan purposes include:
(i) Purchase. If the credit is to finance the acquisition of the property identified in paragraph (a)(6) of this section, the creditor shall disclose that the loan is for a “Purchase.”(ii) Refinance. If the credit is not for the purpose described in paragraph (a)(9)(i) of this section, and if the credit will be used to refinance an existing obligation, as defined in § 1026.20(a) (but without regard to whether the creditor is the original creditor or a holder or servicer of the original obligation), that is secured by the property identified in paragraph (a)(6) of this section, the creditor shall disclose that the loan is for a “Refinance.”
(iii) Construction. If the credit is not for one of the purposes described in paragraphs (a)(9)(i) or (ii) of this section and the credit will be used to finance the initial construction of a dwelling on the property identified in paragraph (a)(6) of this section, the creditor shall disclose that the loan is for “Construction.”
(iv) Home equity loan. If the credit is not for one of the purposes described in paragraphs (a)(9)(i) through (iii) of this section, the creditor shall disclose that the loan is a “Home Equity Loan.”
Starting with the definition of purchase, it doesn’t seem to fit since the daughter has acquired the property through inheritance regardless of/outside of the credit transaction. The definition of refi doesn’t seem to fit either since in 1026.20(a) it says “A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer.” As strange as it seems, I think home equity is what you would disclose.
I’ll tag Jack to see if he agrees.
Thank you, Robin, that is what I think too. I wanted to make sure there was not something I was missing. Thank you for your help!
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