Okay---I saw that a few of you have been going back and forth about two separate RESPA questions--the threads are long and detailed--so I am posting your response for you here. I received this in writing from HUD, Jim Sorrentino---
Question 1

3500.5(b)(1)- Exemptions

A loan on property of 25 acres or more.

What does "on" mean?

"On" means a loan SECURED BY property of 25 acres or more. Since the exemption refers to "property", and not "a property", this means that the loan is secured by property totalling 25 acres or more. So if a loan is secured by two (or more) non-contiguous properties with a total acreage greater than 25 acres, the loan is exempt under 3500.5(b)(1).

Question 2

3500.5(3) states that 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. Temporary financing, bridge or swing loans, construction loans with no permanent financing ARE NOT covered, but if they have permanent financing, they ARE covered. This sentence in 3500.5(3) appears to contradict that understanding.

There is not a contradiction. Bridge and swing loans are short-term, non-permanent loans. If they are not short-term and non-permanent, they are not bridge or swing loans, and the exemption does not apply. The confusion comes about because of the reference in the question to "construction loans with no permanent financing", which are not covered; but if "they" (meaning the construction loans) have permanent financing, then "they" (the construction loans) are covered.

To make the second one more clear----I asked him is a Bridge or Swing has a permanent take out or permanent financing set up with the same lender---does this mean RESPA applies--he said yes.

So there you have it--straight from HUD.

Don't know what to tell you--FDIC does not write RESPA--it is HUD's rule. Jim has not led me down a wrong path in four years. I have always been taught what he said, I have worked by this ruling, and now I have it in writing. He also said he ran his repsonse by "the Director of the Office of RESPA/Interstate Land Sales," so I would not do anything any different than what I was able to provide.

Just my thoughts---

I also checked HUD's website--only spent about 10 minutes--could not locate Mr. Shapiro in any legal or Office of RESPA division? Maybe he is no longer there?

I believe I'll stick to my opinion in the previous thread. I think I can defend this position with examiners. If examiners should choose to make an issue of it, it will the first time in the long history of bridge lending at this bank. The section of RESPA in question is clearly written in black and white....no interpretation necessary. It says what it says.

Dan, I wish I knew how to help you get a follow up. That is strange. I hear all of the time that folks have a terrible time getting through to HUD. I will post if I get anything different.

Swiggles--it is a banking decision- I think you are wrong.

Could this thread be moved to the Lending section? That is where I would search for it. It is definitely a lending topic.

3500.5(b)(3)

Temporary financing. . . . A ``bridge loan'' or ``swing loan'' in which a lender takes a security interest in otherwise covered 1- to 4-family residential property is not covered by RESPA and this part.

Borrower: What if my home doesn't sell by the time the loan comes due?

Loan Officer: We can either renew it for you, or convert it to a term loan? If we convert it to a term loan. Here are the estimated costs (GFE), and interest rate and payment terms (ETIL).

IMHO, RESPA will not apply to the bridge loan. It is still temporary financing. And there is no reference to "if the loan may be converted" for a bridge loan as there is a construction loan.

I'll stand with Swiggles on this one.

Quote:

---

If not, and you will be providing permanent financing once you know what the remaining balance will be...

---

I do not believe this would be the same scenario as being discussed (I didn't go back to the original thread). However, if the lender knows that the sale of the house will not be enough to extinguish the debt and that they definitely will be converting an unpaid balance to permanent financing, then I think I would have to side on the side of disclosing. The short term loan is the first phase of a two phase permanent loan. I'm not even sure I would classify such a loan as a bridge loan because it isn't bridging the gap if there will be a known shortage.