We believe that you should list the loan’s purpose as a home equity loan.

Closed-end “consumer purpose” loans secured by vacant land are subject to the TILA-RESPA integrated disclosure requirements of Regulation Z, including the requirement to provide a loan estimate. Loan estimates must identify the loan’s purpose as either “purchase,” “refinance,” “construction,” or “home equity loan.” Any loan that is not for the purchase, refinance or construction of the real estate securing the loan must be disclosed as a home equity loan.

Because the loan is for nursing home expenses and is not for the purchase, refinance or construction of real estate, we believe the loan’s purpose should be described as a home equity loan. 

For resources related to our guidance, please see:

• CFPB Integrated Mortgage Disclosures, Final Rule, 78 FR 79793 (December 31, 2013) (“The Bureau believes that including 25-acre loans, vacant-land loans, and construction-only loans within the scope of the integrated disclosure requirements effectuates the purposes of TILA under TILA section 105(a), because it would ensure meaningful disclosure of credit terms to consumers and facilitate compliance with the statute.”)

• Regulation Z, 12 CFR 1026.19(e)(1) (“In a closed-end consumer credit transaction secured by real property, other than a reverse mortgage subject to § 1026.33, the creditor shall provide the consumer with good faith estimates of the disclosures in § 1026.37.”)

• Regulation Z, 12 CFR 1026.37(a)(9)(iv) (“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.’”)

• TILA Supervision and Examination Manual (updated April 1, 2015) (“Loan purpose, categorized as ‘Purchase,’ ‘Refinance,’ or ‘Construction.’ All other loan purposes must be categorized as ‘Home Equity Loan’ (1026.37(a)(9))”)