This excellent question was recently received from one of our banker friends:
We have a loan for $17,000 in new money, renewing $14,000 in a loan we have had for several years. The new money is for medial bills. The collateral is a house on 5.7 acres and we have 33 acre tract beside the house tract. We have had these two tracts of land on one note for 11 or 12 years now. Is this exempt from the new CFPB regulations because the acreage is over 25 acres? Or do we need to escrow, test section 32, 35 and prove ability to repay by section 43? Does the Reg Z exemption for acreage carry over to the new CFPB regulation requirements or do we have to still meet those? We just want to make sure before we do an exemption to the regulation. I was thinking it was exempt and did not need the GF, etc. We still need to do a right of recession since it is their principal dwelling and is for consumer purpose?
From the information you’ve given it sounds like this loan would be exempt from RESPA/Reg X due to the acreage, but that would not affect coverage under Reg Z. It doesn’t seem to meet any of the Reg Z exemptions; therefore, Reg Z would apply meaning you would need to test for the specific items you mentioned below – section 32, 35, 43 and apply RofR.