Question 89

A loan to buy a mobile home as a personal residence

The federal Truth-in-Lending Act applies to consumer credit transactions, including loans secured by a dwelling. Therefore, a loan to buy a mobile home to be used as a personal residence falls under this regulation.

A) a loan to buy a mini-mall

This option is incorrect because the Truth-in-Lending Act specifically addresses consumer credit, which does not include commercial loans such as those for purchasing a mini-mall. Such loans are typically considered business loans and are not regulated under this act.

B) a loan to remodel a barber shop

This option is also incorrect. Similar to the first option, a loan intended for business purposes, such as remodeling a barber shop, does not qualify as consumer credit under the Truth-in-Lending Act. The act is focused on protecting consumers in personal credit transactions.

C) a construction loan to a builder for a spec home

This option is incorrect as well. A construction loan for a builder is considered a commercial transaction, not a consumer loan. The Truth-in-Lending Act does not apply to loans made for business or commercial purposes, thus excluding this type of loan.

D) a loan to buy a mobile home as a personal residence

This option is correct because the Truth-in-Lending Act is designed to protect consumers borrowing for personal use. A loan for purchasing a mobile home as a primary residence qualifies as consumer credit and is therefore covered by the act.

Conclusion

The correct answer, a loan to buy a mobile home as a personal residence, is the only option that meets the criteria of the Truth-in-Lending Act, which regulates consumer credit. All other options involve business-related transactions, which are not protected under this federal law, highlighting the act's focus on consumer rather than commercial credit.