What defines a residential mortgage under Regulation Z?

A residential mortgage under Regulation Z is defined as a loan that is secured by a dwelling that is used for personal, family, or household purposes. This means the loan is intended for individuals who are purchasing or refinancing a home where they will live. Regulation Z is a part of the Truth in Lending Act, which aims to promote the informed use of consumer credit by requiring clear disclosure of key terms of the lending agreement, particularly for loans that are tied to consumer dwellings.

Choosing a loan for personal, family, or household occupancy captures the idea that the mortgage is specifically designed to meet the needs of the consumer in providing housing. This might include loans for buying houses, townhouses, or condominiums where the borrower intends to make it their primary residence.

Other options don't align with this definition; for example, loans for investment properties refer to properties that are purchased primarily to generate rental income, and loans for business purposes are typically associated with financing for commercial activities rather than personal living situations. A loan without any secured property would not meet the mortgage definition, as mortgages must be tied to real estate that serves as collateral. Hence, the focus on personal, family, or household occupancy is what makes option B the correct choice regarding what defines a residential mortgage