Business or Personal loan?

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Latest post 02-20-2013 6:28 PM by adjuster jack. 46 replies.
  • 02-15-2013 7:20 PM

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Business or Personal loan?

    I will no doubt hire an attorney but i want to research on my end and learn more beforehand so i can be of better assistance in relaying my issue.
    I approached my bank in efforts to take control of my property, my principal/primary residence. I stated my need and desire to have my home and a mortgage in my name because of the positive affect it would eventually have on my credit report. In order to make the deal my own and away from an ex partnership, the bank required that i bundle 2 more properties from my ex partnership (at a price named by the bank in order to pay another customers debt) and 2 more rentals that i already owned (and financed by the same bank) all into one loan. The day before the closing I told the bank i only wanted my home and that im only doing the deal so that i could accomplish this and that hopefully the bank would see this as a kind gesture. My lender stated he understood that I was doing it for the benefit of all. A few weeks prior to close the lender spelled out exactly how the purchase agreement was to be drawn up, including a seller carry back note which would protect the lender if any LTV issues were to rise. There was no seller carry back note he inflated appraisals and had me purchase properties at his appraised value. Ive jumped off track a bit, the purchase agreement that was filled out by the seller and through the direction of an email from the lender, called for the buyer to be me personally. This was correct because this is what I wanted. However, I was a buyer and the guarantor (which I dont think is possible), but my sole member LLC was also a borrower and the sole grantor on the DOT. I asked the title company why they did this and I was told that it was simply human error. They first said that a quit cliam deed can fix it and I eventually got them to say a correction deed can be done.
    2 Questions:
    1.Considering my intent and purpose, Can I be protected as a consumer on this even though it was packaged by the bank as a business loan?
    2.If there is a correction deed performed, what does that do to a DOT that was granted by my LLC?
    Thanks for any time, insight and opinions

  • 02-15-2013 7:37 PM In reply to

    Re: Business or Personal loan?

    jusj:
    Considering my intent and purpose, Can I be protected as a consumer on this even though it was packaged by the bank as a business loan?

    Your intent and purpose is irrelevant.

    What you signed is what counts.

    jusj:
    If there is a correction deed performed, what does that do to a DOT that was granted by my LLC?

    No way to answer that since your post is not clear about who did what to whom and what you want to be protected from.

    Bottom line, though, if you borrowed money to buy properties, you owe the money.

    If you aren't sure about what you did or think you got led down the garden path, then it's time to hire an attorney.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 02-15-2013 8:29 PM In reply to

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    While i do apprecite your response, I would like a little more credibility before I accept your answer. What makes you say that a persons intent or purpose is irrelevant? I hope this is not true but I also hope you would not be just acting as an informed person when you are just going from a gut instinct or what some other misinformed person has said.

    Again Thanks

    J

  • 02-15-2013 9:51 PM In reply to

    Re: Business or Personal loan?

    jusj:
    1.Considering my intent and purpose, Can I be protected as a consumer on this even though it was packaged by the bank as a business loan?

    Protected as a consumer under which consumer protection law? The answer matters, as each law defines the term “consumer” a bit differently. Note that owning the property individually is not typically the test used, as individuals can both engage in business transactions as well as transactions that are simply for personal consumption.

    jusj:
    2.If there is a correction deed performed, what does that do to a DOT that was granted by my LLC?

    Without reading the documents to see exactly how the deal was done and what the proposed correction deed would say, it's not possible to answer that question.

  • 02-15-2013 11:07 PM In reply to

    Re: Business or Personal loan?

    jusj:
    What makes you say that a persons intent or purpose is irrelevant?

    When you sit down with somebody and tell them you want to do "A" and they put a paper in front of you that says you do "B" and you sign that paper, that's when your desire to do "A" becomes irrelevant.

    Especially with loan contracts that generally says things like "This is the entire contract. Anything said outside the contract doesn't count" and "By signing this contract I acknowledge that I have read it and understand its terms and conditions."

    jusj:
    I also hope you would not be just acting as an informed person when you are just going from a gut instinct or what some other misinformed person has said.

    You don't have to take my word for it. You're welcome to consult an attorney and review your options.

    Besides, you haven't said what your goal is or what you want to be protected from.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 02-15-2013 11:34 PM In reply to

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    Taxagent, which consumer protection law would suit my situation? This is basically why I am on this forum, I was hoping to engage with someone who may know of consumer protection laws.. It involves real estate so maybe real estate it also involves banking and or financing... which documents would someone need to see? There was a DOT that was granted by my LLC which was the grantor. I am asking if the title company has admitted an error and they do a correction deed which would deed into my name, does that pretty much nullify the current DOT bc the LLC never should have been the grantor?

  • 02-16-2013 2:52 AM In reply to

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    In the real world sometimes you sit down and intend on doing A, and you fully trust that other people are in good faith and you believe that A is happened or has happened but B happened. Hence consumer protection laws, Jack.

    There are all kinds of clauses, Jack, some might as well not even be included and others are need strict obeyence, but before all of that, if there are elements missing from a contract, well then I dont believe there is a contract.

     

  • 02-16-2013 3:01 AM In reply to

    Re: Business or Personal loan?

    jusj:
    Taxagent, which consumer protection law would suit my situation? This is basically why I am on this forum, I was hoping to engage with someone who may know of consumer protection laws

    There are a variety of federal and state consumer protection laws that might apply to a mortgage loan situation. And each one has a different scope of what is covered. I'd have to review the details of the transaction and then walk you through each of those laws for you to see what might be impacted by the transaction if you wanted to know about every possible consumer law here. I hope you can appreciate that would take some considerable time and is not well suited to a forum like this.

    But I'll give you one example so you can see how these laws tend to work. The Truth-in-Lending Act (TILA) requires lenders to make specified disclosures to borrowers in certain loan transactions. Further, TILA grants to borrowers in a "consumer credit transaction" a 3 day right to rescind a loan in which the borrower will put up a security interest in a property that he uses as a his primary dwelling (basically a mortgage loan on your principal residence). A "consumer credit transaction" is defined as "one in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes."

    So, to the extent that the LLC is the borrower and/or the one putting up the property as security for the loan, the TILA right of recission would not apply because a LLC is not a natural person. You must be a borrower on the loan as an individual, be the one putting up the home in which you live as security for the loan, AND the loan funds must be primarly for personal, family, or household purposes for you to get the benefit of the TILA right of recission.

    As you can see, these laws are detailed and the exact definitions matter to determine what is covered and what isn't.

    jusj:
    I am asking if the title company has admitted an error and they do a correction deed which would deed into my name, does that pretty much nullify the current DOT bc the LLC never should have been the grantor?

    That's a different question. The LLC cannot grant a deed of trust in a property it does not own. So, does the LLC own an interest in the property? If not, then the deed of trust it granted isn't any good and they'd need to fix that to get a good deed of trust in place.

  • 02-16-2013 3:05 AM In reply to

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    Ill try and condense my Question

    I wanted a loan to purchase my house, regardless of what I bought or was required to buy in order to fulfill my purpose, the loan would be for personal use. My bank categorized it as a business loan. This protects my bank from strict compliance issues. At this point, my question is, am I no longer seen as a protected consumer because my bank deemed my purpose business in order to make the loan on their terms and to avoid consumer compliance?

  • 02-16-2013 3:14 AM In reply to

    • jusj
      Consumer
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    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    they have my LLC and my natural self as separate and joint  borrowers on the loan. they have my natural self as a guarantor (which isnt the correct use of a guarantor) and they have my LLC by itself as the grantor.

    My natural self was the only buyer on the purchase agreement. I spoke to the title agency and they are going to do a correction deed, which would start from the seller to me - not a quit claim.

  • 02-16-2013 3:57 AM In reply to

    Re: Business or Personal loan?

    jusj:
    At this point, my question is, am I no longer seen as a protected consumer because my bank deemed my purpose business in order to make the loan on their terms and to avoid consumer compliance?

    The details of the transaction will determine whether any particular consumer protection law applies, not the label that the bank put on the transaction. Whether the bank is correct that it didn't have to comply with one or more consumer protection laws, I cannot say since I don't have the full details of the transaction nor the details of what consumer protection laws it followed and which it didn't.

  • 02-16-2013 4:02 AM In reply to

    Re: Business or Personal loan?

    jusj:
    they have my LLC and my natural self as separate and joint  borrowers on the loan. they have my natural self as a guarantor (which isnt the correct use of a guarantor) and they have my LLC by itself as the grantor.

    The lender would want you as guarantor for the LLC's joint obligation on the loan. That would indeed be a common guarantor situation.

    Ok, so you and the LLC are the joint borrowers on the loan. Are you both owners of the property? If so, then the bank needs a deed of trust from both of you to be fully secure. If you are the only owner, it just needs a deed of trust from you. If the LLC is the only owner, the bank simply needs a deed of trust from the LLC.

  • 02-16-2013 2:15 PM In reply to

    • jusj
      Consumer
    • Not Ranked
    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    OK I found this...

    BCFP 12 CFR Chapter X Part 1026 REG Z

    SubPart A- General

    Official interpretation

    3.Factors. In determining whether credit to finance an acquisition...Is primarily for business or commercial purpose (as opposed to  consumer purpose), the following factors should be considered. a.....b.....c......d..... The borrowers statement of purpose for the loan.

    Would this pertain to my situation? Or is this for something different?

  • 02-16-2013 2:18 PM In reply to

    • jusj
      Consumer
    • Not Ranked
    • Joined on 02-15-2013
    • MO
    • Posts 29

    Re: Business or Personal loan?

    Link to last post reference

    www.bankersonline.com/...

  • 02-16-2013 2:31 PM In reply to

    Re: Business or Personal loan?

    I think there is still a couple of unanswered questions that might shed some light.

    1 - Was the home to be deeded to you as an individual or was it to be deeded to your LLC?

    2 - Was the home to be used as your primary residence (living in it all the time) or a secondary residence (live in it for part of the year but don't rent out) or a rental/investment?

    4 - What do the previously mentioned (other properties) have to do with it?

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
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