Different regulations, such as Real Estate Settlement Procedures Act (RESPA), Home Mortgage Disclosure Act (HMDA) and Regulation Z, dominate today’s loan-approval landscape. Among all the loan options, if we consider bridge loan financing, then it is exempted from HDMA and RESPA; nevertheless, Regulation Z can play a deciding factor in getting a bridge loan approved — unless the loan receives an exemption under § 1026.3. Now, let us explain Regulation Z in detail so that you get to know the big picture.
Understanding Regulation Z’s § 1026.3
Bridge loans are short-term loans that fill the void created due to the unavailability of long-term financing. As per the Regulation C § 1003.4(d) (3), all formats of temporary financing are exempted from HMDA; the approval of bridge loans is listed as a specific example here. Further, even Regulation X § 1024.5 specifies that all the bridge loans are uncovered by RESPA.
However, Regulation Z does not have a blanket exemption for temporary financing, such as bridge loans. Park West Capital is among the leading lenders analyzing all the regulatory requirements to determine if the transaction is meeting such exemptions. If such an analysis is not done before, then the loan application will be subject to other requirements that include specific disclosures.
§ 1026.3 exempts different transactions from several regulations; these transactions may include:
- Business purpose credit
- Loans over certain thresholds
1026.3 identifies exemptions from the famous Integrated Disclosure Rule disclosures (the closing disclosure or the loan estimate disclosure); these disclosures are applicable for certain situations. So any commercial bridging finance (or other temporary financing options) requires meeting different conditions such as being a:
- Subordinate lien
- Non-interest bearing that is done for a specific purpose and that meets specific contract and cost provisions
- Financing option complying with Regulation Z
And any bridge loan that meets these exemptions will be subject to Regulation Z requirements. So if commercial or residential buyers look forward to securing bridge loans, get in touch with Park West Capital — one of the chief bridge loan lenders that have the experience to cater to real estate financing needs of residential and commercial buyers. For any further questions, email at email@example.com or call 800–969–4901.