An investment loan is a loan to a business (company, corporation or LLC) for investment into the business. The loan proceeds are paid directly to the business. However, loans described as “investment loans” are not necessarily exempt from the Consumer Loan Act (CLA) or Mortgage Brokers Practices Act (MBPA). The determining factor is the purpose of the loan.
For example, if a natural person has rental property and tenants, the proceeds of the rent typically go to the natural person as income for their personal, family or household use. These loans are regulated under the CLA and MBPA and must be disclosed to the Department in the Mortgage Call Reports and Consumer Loan annual assessment.
“Residential mortgage loan” means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling.
Application of Chapter
(2) This chapter does not apply to the following:
(e) Any person making a loan primarily for business, commercial, or agricultural purposes unless the loan is secured by a lien on the borrower’s primary residence;
Who is exempt from licensing as a consumer loan company?
(3) Under RCW 31.04.025 (2)(e), any person making a loan primarily for business, commercial, or agricultural purposes unless the loan is secured by a lien on the borrower’s primary residence.
Purpose, Scope and coverage.
5) What types of transactions are covered? The Mortgage Broker Practices Act and these rules cover the assisting to obtain any “residential mortgage loan” defined in RCW 19.146.010 and WAC 208-660-006. Violations of RCW 19.146.0201, however, are not limited to residential mortgage loan transactions.
(19) “Residential mortgage loan” means any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single-family dwelling or multiple-family dwelling of four or less units.
via Winter 2015 Consumer Services Newsletter – Investment Loans.