Notice: Function _load_textdomain_just_in_time was called incorrectly. Translation loading for the wp-migrate-db domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /srv/app/gotoiba-dev/htdocs/web/wp-includes/functions.php on line 6121
Will vacant lot loans be covered by the updated Military Lending Act rules that become effective on October 3, 2016? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Will vacant lot loans be covered by the updated Military Lending Act rules that become effective on October 3, 2016?

—

by

Yes, the amended Military Lending Act rules will cover a consumer-purpose loan secured by a vacant lot, unless the loan purpose is to finance the initial construction of a dwelling on the vacant lot.

In general, the amended Military Lending Act rules cover all consumer-purpose loans, with several specific exemptions, including an exemption for residential mortgages. The residential mortgage exemption covers “any credit transaction secured by an interest in a dwelling, including a transaction to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loan or line of credit, or reverse mortgage.” As a result, mortgages secured by dwellings will be exempt from the amended rules, but other consumer-purpose mortgages may be covered. If a loan is secured by a vacant lot without any dwellings, it will be covered by the amended rules, unless it is financing the construction of a dwelling on the vacant lot.

For resources related to our guidance, please see:

  • 32 CFR 232.2(a)(1) (as amended by final rule effective October 1, 2016) (“This part applies to consumer credit extended by a creditor to a covered borrower, as those terms are defined in this part. . . .”)
  • 32 CFR 232.3(f)(2) (as amended by final rule effective October 1, 2016) (“ . . . consumer credit does not mean (i) A  residential mortgage, which is any credit transaction secured by an interest in a dwelling, including a transaction to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loan or line of credit, or reverse mortgage; . . .”)