The exclusion applies only if the lender records or otherwise perfects the security interest within the term of the loan
No. A closed-end loan is only a covered longer-term loan if the cost of credit at consummation exceeds 36 percent per annum. 12 CFR §1041.3(b)(3)(i). If the cost of credit at consummation is not more than 36 percent per annum, a closed-end loan does not become a covered longer-term loan if the cost of credit later exceeds 36 percent per annum. For purposes of the Payday Lending Rule, consummation means the time that a consumer becomes obligated on a new loan or a modification that increases the amount of an existing loan. 12 CFR §1041.2(a). See also comment 1041.2(a)(5)-1.
Lenders should keep in mind that the Payday Lending Rule prohibits lenders from taking any action with the intent of evading the prohibitions on certain payment transfer attempts. 12 CFR §1041.8(e). In determining whether a lender has acted with the intent of evading the requirements of the rule, the form, characterization, label, structure, or written documentation of the lender’s action shall not be dispositive. Comment 1041.8(e).
Maybe. The answer depends on whether the security interest in the real property or the personal property used as a dwelling is otherwise perfected during the term of the refinance. If the security interest is otherwise perfected during the term of the refinance, the exclusion for real estate secured credit applies even if the mortgage or other security instrument is not re-recorded during the term of the refinance. For example, depending on applicable state law, a lender may be able to perfect the refinance by referencing a previously recorded mortgage in the promissory note or another document.
Credit is excluded as real estate secured credit if the credit is secured by any real property or by personal property (e.g., mobile home, boat, cooperative unit) to be used as a dwelling. 12 CFR §1041.3(d)(2). Comment 1041.3(d)(2)-1. It is not necessary to record the mortgage or other security interest during the term of the loan as long as the lender otherwise perfects the security interest during the term of loan. Thus, in a situation where a lender is refinancing a real estate secured loan, the lender may be able to record the mortgage or other security instrument during the term of the original loan and then perfect the refinance without re-recording the mortgage or other security interest, if permitted under applicable state law.
Rather, the actual substance of the lender’s action as well as other relevant facts and circumstances will determine whether the lender’s action was taken with the intent of evading the requirements of the rule
No, the purchase money exclusion does not apply to an automobile loan that finances an extended warranty or service contract as well as the purchase price of the automobile Under the Payday Lending Rule, credit is excluded as a purchase money security interest loan if: (a) the credit is extended solely and expressly for the purpose of financing a consumer’s initial purchase of a good (e.g., television, household appliance, furniture) (“sole purpose” test); and (b) the credit is secured by that good. 12 CFR §1041.3(d)(1); comment 3(d)(1). Although the exclusion may apply if the credit finances certain mandatory and unavoidable expenses, such as taxes and government licensing fees, it does not apply if the credit finances an extended warranty or service contract.
The purchase money exclusion applies if an automobile loan finances solely the purchase of the automobile, or includes mandatory and largely unavoidable expenses, such as federal, state, or local taxes and amounts required to be paid under applicable state and federal licensing and registration requirements. 12 CFR §1041.3(d)(1); comment 1041.3(d)(1). However, if the automobile loan includes an extended warranty or service contract that is being sold along with an automobile, the loan does not meet the “sole purpose” test and the purchase money exclusion would not apply. Similarly, if the amount financed is greater than the cost of acquiring the good (i.e., the amount financed for an automobile loan exceeds the cost of the automobile because the loan also finances the cost of an ancillary good or service), the loan does not meet the “sole purpose” test and cannot be excluded as a purchase money security interest loan. 82 FR 54472, 54544.