6. Which one of the following transactions is regulated by Regulation Z?
Answer: B
A borrower obtaining a mortgage loan to purchase a $410,000 home
Regulation Z, also known as the Truth in Lending Act, is designed to protect consumers in credit transactions, particularly in the context of residential mortgage loans. Therefore, a borrower obtaining a mortgage loan to purchase a $410,000 home falls under the regulations set forth by Regulation Z.
A) An investor seeking to purchase a residential rental property
This option is incorrect because Regulation Z primarily applies to consumer credit transactions. Although purchasing a residential rental property involves credit, it is typically considered an investment rather than a consumer transaction, thus not regulated under Regulation Z.
B) A borrower obtaining a mortgage loan to purchase a $410,000 home
This option is correct as it directly involves a consumer obtaining a mortgage loan for the purchase of a primary residence. Regulation Z specifically addresses such transactions to ensure borrowers are informed about the terms and costs associated with their loans.
C) A business entity financing for the purchase of a company car
This option is not regulated by Regulation Z because the regulation focuses on consumer transactions rather than business financing. A company car purchase typically falls under business credit regulations, which are distinct from those applicable to personal loans.
D) A property owner applying for a $10,000 loan to finish a commercial space
This option is incorrect since Regulation Z does not cover loans for commercial purposes. The $10,000 loan for finishing a commercial space is aimed at business use, and thus falls outside the consumer protections provided by Regulation Z.
Conclusion
In summary, the correct answer is B, as it pertains to a consumer transaction involving a mortgage loan for a residential property, which is explicitly regulated by Regulation Z. All other options involve transactions that either do not qualify as consumer credit or fall under different regulatory frameworks, making them incorrect choices in this context.