Mortgage broker transactions that are table funded (the loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds) are not secondary market transactions and therefore are covered by RESPA.
RESPA covers transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property.
RESPA does not apply to extensions of credit to the government, government agencies, or instrumentalities, or in situations where the borrower plans to use property or land primarily for business, commercial, or agricultural purposes.
RESPA covers all federally regulated mortgage loans including purchase loans, refinances, home improvement loans, land contracts and home equity lines of credit (HELOCs).
The following transactions are not covered by RESPA: An all-cash sale; • A sale where the individual home seller takes back the mortgage; and • Business, Commercial, or Agricultural purpose loans.
NAR's Legal Affairs staff explains the Real Estate Settlement Procedures Act (RESPA) and how it affects REALTORS®. RESPA generally prohibits kickbacks and offering a thing of value in exchange for the referral of business to a settlement service provider.
The TILA-RESPA rule applies to most closed-end consumer credit transactions secured by real property, but does not apply to: HELOCs; • Reverse mortgages; or • Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).
The provisions of the act apply to most types of consumer credit, including closed-end credit, such as car loans and home mortgages, and open-end credit, such as a credit card or home equity line of credit.
All business purpose loans are wholly exempt from TILA/RESPA coverage. All loans to bona fide business entities are wholly exempt from coverage, regardless of purpose.
The term “covered credit transaction” includes all business credit (including loans, lines of credit, credit cards, and merchant cash advances) unless otherwise excluded under § 1002.104(b).
An application is defined as the submission of six pieces of information: (1) the consumer's name, (2) the consumer's income, (3) the consumer's Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number), (4) the property address, (5) an estimate of the ...
According to the Consumer Financial Protection Bureau's final rule, the creditor must deliver the Closing Disclosure to the consumer at least three business days prior to the date of consummation of the transaction.
RESPA, the Real Estate Settlement Procedures Act, prohibits kickbacks. Kickbacks involve giving or receiving something of value in exchange for referrals of settlement services. 2. Reasonable fees paid for services actually performed are not prohibited by RESPA.
The Act requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The Act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts.
TILA applies to “open-end credit,” such as credit cards, with repeat transactions and unspecified end dates for repayment. It also applies to “closed-end credit,” such as auto loans, with set terms and payment structures if the closed-end product has a finance charge or at least four installments.
RESPA applies to all federally related mortgage loans made by lenders for the sale or transfer of 1-4 unit residential dwellings. The Housing Financial Discrimination Act prohibits redlining.
The SAFE Act's definition of "residential mortgage loan" includes a loan secured by a consensual security interest on a "dwelling" and cross-references the definition of dwelling in section 103(v) of the Truth in Lending Act (TILA) (15 U.S.C. 1601 note).
RESPA applies to home loans made for residential properties designed to accommodate one to four families. These loans include most home purchase loans as well as home equity lines of credit (HELOCs), mortgage refinances and home improvement loans.
Transactions generally not covered under RESPA include: “an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.” “The sale of a loan after the original funding of the loan at settlement is a secondary market transaction.
The new rules, which would modify RESPA and Regulation X's existing mortgage servicing framework, are designed to streamline the process for obtaining mortgage assistance, and incentivize servicers to prioritize borrower aid over foreclosure.
Final answer: RESPA applies to a variety of real estate transactions but generally does not apply to a seller-financed loan when the seller does not regularly extend credit. It covers transactions such as condominium purchases, second mortgages, and federally-insured loans.
Types of Real Estate Loans Exempt From RESPA Requirements
Normally, loans secured by real estate for a business or agricultural purpose are not covered by RESPA. However, if the loan is made to an individual to purchase or improve a rental property of one to four residential units, then it is regulated by RESPA.