RESPA (Real Estate Settlement Procedures Act) applies to which type of loans?
Correct Answer
B) Federally related mortgage loans for 1-4 family residential properties
RESPA reaches federally related mortgage loans secured by a first or subordinate lien on residential real property designed for occupancy by one to four families, which takes in most purchase loans, refinances and home equity loans. Regulation X exempts loans made primarily for a business, commercial or agricultural purpose, temporary financing such as a construction loan, loans secured by vacant land unless a dwelling will be built or placed on it with the loan proceeds within two years, and secondary market transactions. There is no acreage test: the old exemption for loans on more than 25 acres was removed when the integrated disclosure rule took effect.
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Related Topics & Key Terms
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Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
More Financing Questions
Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
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