So the NCUA tried to wash its hands of this:
According to credit union documents, your loans were made to refinance mortgages secured by investment rental properties obtained for business purposes. Loans made for business, commercial, agricultural, or organizational credit are specifically exempt from RESPA and the Federal Reserve Board’s Regulation Z, which carries out the purposes of the Truth in Lending Act.
They then go on to say that all of the paperwork NASA provided, “including Good Faith Estimate and HUD-1 forms, Interest Rate Lock, and Loan Points Agreement” was voluntary. Right, it was done purely out of the goodness of their disreputable heart.
I did a little research.ย RESPA does exempt business purpose loans. (See here and Regulation Z 226.3 (a)(1); note, this is not a link to the actual law.)ย At least one court case has interpreted rental property as being for business purposes. However, other cases have interpreted the law more subtly. According to these folks, the intent of the loan is more important in determining whether the loan is for business purposes than the type of loan. Since I was refinancing to lower the interest rate on my primary residence, at least one of my loans should be considered a consumer loan and not a business loan. I have written a second letter to the NCUA:
Dear [name removed]:
I sent a complaint about NASA Federal Credit Union to the NCUA in January and have received your response (attachment #1). You claimed that my โloans were made to refinance mortgages secured by investment rental properties obtained for business purposes.โ However, this is only true of [removed] The other property, [removed], was my primary residence in 2010. The prior loan was a consumer loan. The intent of the refinance was to lower the interest rate on the mortgage of my primary residence.
A number of judicial decisions have established that it is the primary purpose of the loan, and not the type of loan, that determines whether the loan is of business or consumer use. I have been living temporarily with family and friends due to a job loss in 2009. It is only due to the economic circumstances that I am away from my place of residence in North Carolina, and it is for the same reason that I applied for an investment loan. I have never changed my address, and [removed] has always been my domicile as is reflected by my driverโs license, my voter registration, and the filing of my tax returns. My intention has been to physically return to my residence. And according to the law, if I return to my residence for at least 14 days during the year, it must be considered my primary residence.
Further, NASA FCU has implicitly acknowledged that my loan is not exempt from RESPA by sending me the paperwork required by RESPA and by addressing this issue through our correspondence (attachment #2). This violation of federal law is well within your jurisdiction. Due to the egregious manner in which my loan was handled and the broader negligence by financial institutions our society is experiencing, you should consider this a patriotic obligation.
I think there is a very high probability they will simply throw their hands in the air and look for some way to get out of doing any real work. But maybe they’ll surprise me and decide not to be a bunch of lazy government bureaucrats.