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RESPA - Short Term Loan
Answer by Dan Persfull, BOL Guru
Guru Bio
Question: We funded a short term loan to an individual borrower which was secured by his primary residence for cash out purposes only, with no refinance involved. Repayment will come from his own funds. Does RESPA apply here? We are extending that loan for another year with no new money and I believe the renewal is exempt, I am correct?
Answer: The first loan is covered by RESPA because it is short term and not temporary. You say there is no refinance involved, so that it is a renewal. If that is the case, RESPA would not apply. However, if your new note is satisfying and replacing the existing note then you have a refinance and RESPA would apply.
First published on BankersOnline.com 5/12/08
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