Final answer:
Individuals are exempt from Regulation Z when making fewer than three loans on owner-occupied residential property per year. This exemption applies to those not regularly engaged in the lending business and aims to help prevent financial crises by regulating lending practices.
Step-by-step explanation:
A person making loans on owner-occupied residential property is exempt from Regulation Z if they do this fewer than three times in a year. Regulation Z, also known as the Truth in Lending Act, mandates certain disclosures and consumer protections regarding the cost of credit. However, there are some exceptions to this regulation, one of which pertains to individuals who are not considered to be in the business of issuing credit if their lending activity is infrequent.
Subprime loans and other risky financial practices have led to significant changes in bank regulations to protect the economy and consumers. Lenders now face regulations that control how loans are issued and sold to prevent financial crises, such as the housing bubble burst in the early 2000s.