Private lenders are exempt if the private lender does not meet the definition of “creditor” under 12 CFR § 1026.2(a)(17). Generally speaking that depends upon whether the private lender “regularly extends consumer credit” (See, 12 CFR § 1026.2(a)(17)(i)and(v)).
A person “regularly extends consumer credit” if they extended credit more than 25 times (or more than 5 times for transactions secured by a dwelling) in the preceding calendar year* or if, in any 12-month period, they originate more than one “high-cost” HOEPA loan that falls under the provisions of 12 CFR § 1026.32, or one or more such credit extensions through a mortgage broker.
*If the numerical standards are not met in the preceding year, they apply to the current year.
CAVEAT: It should be noted that even private lenders who do not meet the definition of “creditor” are subject to the Loan Originator Compensation Rule, which does not require a Closing Disclosure, but has its own set of prohibitions and requirements. (Seller financers who finance no more than one or no more than three properties in any 12-month period may qualify for exclusion from this rule depending on the specifics of the transaction.) (See, 12 CFR § 1026.36)