An originator arranges a $95,000 loan secured by a 2-unit building the borrower lives in half of. If the loan is primarily for personal, family, or household use, is it a residential mortgage loan within the SAFE definition?
Correct Answer
C) Covered: it is primarily consumer-purpose credit secured by a dwelling
C. The stipulated consumer purpose and dwelling collateral meet the definition. The loan’s primarily personal, family or household purpose is explicit. A two-unit residential structure fits the one-to-four-unit dwelling definition. Scope and exceptions: Do not assume all loans on two-unit properties are consumer-purpose. The stated purpose matters; this does not decide every program or licensing requirement. Source: Residential mortgage loan definition — https://www.consumerfinance.gov/rules-policy/regulations/1008/23/ Section 1026.2(a)(19) — https://www.consumerfinance.gov/rules-policy/regulations/1026/2/
Why This Is the Correct Answer
C. The stipulated consumer purpose and dwelling collateral meet the definition. The loan’s primarily personal, family or household purpose is explicit. A two-unit residential structure fits the one-to-four-unit dwelling definition. Scope and exceptions: Do not assume all loans on two-unit properties are consumer-purpose. The stated purpose matters; this does not decide every program or licensing requirement.
Why the Other Options Are Wrong
Option A: Not covered, because the $95,000 amount is under the 6-figure line
No $100,000 minimum appears in this definition.
Option B: Covered only where all 2 units are occupied by the same borrower
Occupying every unit is not required.
Option D: Not covered, because a 2-unit building is commercial property
Two units do not automatically make the structure nonresidential.
Exam Tip
Check loan purpose and security together.
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