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Could someone please tell me what are considered "consumer loans" and what that means regarding other types of loans.

As of right now I understand that vehicle loans and home equity loans/lines are consumer, but the bank I work for doesn't consider mortgages a consumer loan. I've found documentation online that suggests Mortgages are Consumer Loans so I'm confused. I work for a Federal Savings Bank..

Could someone give me an overview of all types of consumer loans and what the differences are in regards to any Federal Laws.

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    I don't think there's any legal definition.
    – littleadv
    Jul 26 '16 at 16:43
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    A Federal Savings Bank's charter dictates that 35% of a bank's assets cannot be Consumer Loans.. there has to be some legal definition in order for that to hold true
    – DukeLuke
    Jul 26 '16 at 18:30
  • Usually the distinction is consumer loans versus commercial loans (loans to businesses).
    – keshlam
    Jul 28 '16 at 14:25
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I went here: Consumer Loan Law.

It seems that a consumer loan is anything other than a business loan or mortgage. However, in California it seems to include a mortgage.

It's a bit weird to see that a HEL can be considered a consumer loan even if it is the primary or the only loan on a property. Getting a HEL can be a great low cost way to (re)finance a property as they tend to have low or no closing costs and lower interest rates.

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    I'm not sure home equity loan enjoy the same tax-advantaged status as mortgages.. ?
    – keshlam
    Jul 27 '16 at 0:03
  • good follow up. I don't believe they do, but I could be wrong.
    – DukeLuke
    Jul 27 '16 at 19:59
  • @DukeLuke: in 2016 they mostly did; you could deduct interest (including points and some costs) on any loan type (mortgage or HEL/HELOC) used to 'buy, build or substantially improve' your main or second home up to $1m ($500k MFS), or HEL/HELOC for other purpose up to $100k ($50k MFS). Starting in 2018, the latter option is removed, and the former limit reduced to $750k ($375k MFS) except for loans dating before Dec. 2017. But this deduction is only beneficial if you itemize, and other TCJA changes also starting in 2018 made itemizing worthless for many. Sep 9 '20 at 1:03
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Here's a good definition of a consumer loan:

What is a Consumer Loan?

As@Pete B. pointed out, there are some states (California loves to be the oddball, doesn't it?) that treat some loans in a more unconventional manner, but the gist of it is that a consumer loan is normally unsecured, meaning there's no collateral or lien associated with it. A signature loan would be a good example of a consumer loan. Many times, loans made by non-banks (finance companies that loan for consumer purchases, for instance) would be considered to be consumer loans.

I hope this helps.

Good luck!

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The definition of "consumer loan" or "consumer transaction" is to be found in the UCC article of the state law code where the transaction takes place. See these from Washington state's UCC title 62A.1-201: (11) "Consumer" means an individual who enters into a transaction primarily for personal, family, or household purposes. (27) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. Note that the term "individual" has several meanings depending on where the term is used. In my opinion per the ejusdem generis rule rule the term "individual" in the above definition is not necessarily a "human being" but even if so, that "natural person" is acting as or for a "sole proprietorship" or some other artificial "legal entity" "commercial entity".

I suggest that a very valuable truth is found in 12 U.S.C. sec. 343 which says:

"any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the Board of Governors of the Federal Reserve System to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this chapter.” [emphasis added]

I believe people interested in the question of consumer transaction ought to inquire of FRB and CFPB to get answer to the following question: I want to find out if "Notes, drafts, and bills of exchange" signed by a private natural man or woman, acting as and for him/herself, and not as a representative for a "housing developer” involved in housing “projects", in order for him or herself to obtain funds to purchase his/her own owner-occupied homestead dwelling house are ever allowed or are “lawful” for discounting under section 343?"

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This is "Consumer Loan" as in a loan to a consumer as opposed to a commercial loan to a business for business purposes. In the context of mortgage lending, this means that 1) the loan is to an individual or certain specific types of trusts, 2) the property is for residential purposes, not office space and the like, and 3) single units in a Condo/Co-op or 1-4 unit properties as opposed to some 5+ unit apartment complex.

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