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RESPA & Bridge Loans
Answer by Andy Zavoina and Lucy Griffin
Question: This question concerns RESPA. If a loan is secured by 2 1-4 family residences, one already owned and one purchasing, and is for 12 months interest only to give customer time to sell one of the houses - is that covered by RESPA?
Answer by Andy Zavoina:
BIO AND CONTACT INFO
You are describing a bridge loan. Under the exemptions to RESPA, under temporary financing, bridge loans are excluded.
"A "bridge loan" or "swing loan" in which a lender takes a security interest in otherwise covered one- to four-family residential property is not covered by RESPA and this part."
Answer by Lucy Griffin:
BIO AND CONTACT INFO
This loan falls under the "temporary financing" exemption in Regulation X. Because the loan is for less than two years, it would not be subject to RESPA.
First published on BankersOnline.com 11/5/01
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