Since this is a commercial loan, the disclosure requirements under both Regulation Z and Regulation X will not apply provided that the loan is “primarily for a business, commercial or agricultural purpose.”

However, even in the context of a commercial loan, as in this case, to the extent that the mortgage covering the dwelling is a first lien, Regulation B requires your bank to provide the loan applicant with a copy of all appraisals and written valuations developed in connection with the loan application, as well as a notice of the right to receive such appraisals and written valuations.

Regulation B also would require an adverse action notice if the loan application is denied (or a counteroffer is made to the borrower). In such an event, Regulation B’s rules vary slightly depending upon the type of business loan at issue and the gross revenues of the business during the preceding year.

In addition, although the Fair Credit Reporting Act addresses consumer credit transactions, it also applies when an individual is a co-applicant for a commercial loan and an adverse action is taken based at least in part on information in the individual’s credit report.

Finally, if the property is in a special flood hazard area under FEMA's Flood Insurance Rate Map or the Flood Hazard Boundary Map, then your bank would be required to provide the requisite written notice to both the borrower and the servicer regarding flood insurance.

For resources related to our guidance, please see:

• Regulation Z, 12 CFR 1026.3(a) (“The following transactions are not subject to this part . . . .  An extension of credit primarily for a business, commercial or agricultural purpose. An extension of credit to other than a natural person . . . .”)

• Regulation X, 12 CFR 1024.5(b)(2) (“Coverage of RESPA . . . . Exemptions . . . . (b)(2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose . . . .”)

• Regulation B, 12 CFR 1002.14(a)(1) (“A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A creditor shall provide a copy of each such appraisal or other written valuation promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier.”) 

• Regulation B, 12 CFR 1002.14(a)(2) (“For applications subject to paragraph (a)(1) of this section, a creditor shall mail or deliver to an applicant, not later than the third business day after the creditor receives an application for credit that is to be secured by a first lien on a dwelling, a notice in writing of the applicant's right to receive a copy of all written appraisals developed in connection with the application.”) 

• Regulation B, 12 CFR 1002.9(a)(3) (Notification to Business Credit Applicants [if an adverse action is taken])

• Fair Credit Reporting, 15 USC 1681m(a) (“If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall (1) provide oral, written, or electronic notice of the adverse action to the consumer . . . .”)

• FDIC Flood Insurance Regulations, 12 CFR 339.9 (“When an FDIC-supervised institution makes, increases, extends, or renews a loan secured by a building or a mobile home located or to be located in a special flood hazard area, the FDIC-supervised institution shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan.”)

• 12 CFR Appendix A to Part 339,  Sample Form of Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance