Which type of mortgage would typically not be regulated by the Department of Financial Institutions?

Commercial mortgages typically fall outside the regulatory purview of the Department of Financial Institutions, as these loans are usually associated with business financing rather than consumer lending. Regulatory oversight for commercial mortgages is often less stringent compared to residential mortgages, reflecting the nature of the commercial real estate market, which is generally viewed as being more sophisticated and less reliant on consumer protection laws meant for individual borrowers.

As such, commercial mortgages do not have the same requirements for disclosures, underwriting practices, and borrower protections that residential first mortgages, second mortgages, and home equity lines of credit are subject to, which are all designed to safeguard consumers and ensure responsible lending practices in the residential market.

In contrast, first mortgages on primary residences, second mortgages, and home equity lines of credit are heavily regulated due to the Consumer Financial Protection Bureau (CFPB) guidelines and other federal regulations that focus on protecting consumers from predatory lending practices and ensuring transparency in loan terms.