Would a $53,500 loan secured by a personal residence to purchase an apartment building be covered by Regulation Z?

The correct answer is based on the principles established by Regulation Z, also known as the Truth in Lending Act, which primarily governs credit disclosures and protections for consumers. Specifically, Regulation Z states that it only applies to loans for personal, family, or household purposes.

In this case, the loan is intended for the purpose of purchasing an apartment building. This represents a business investment rather than a personal use. Although the loan is secured by a personal residence, the primary purpose of the loan is for business rather than personal use. Therefore, it does not meet the criteria for coverage under Regulation Z.

Understanding that Regulation Z is designed to protect consumers on loans intended for personal use is crucial. Loans made for business purposes, regardless of the collateral used, fall outside the scope of Regulation Z requirements. This distinction clarifies why the answer correctly identifies that the loan should not be covered by Regulation Z.