RESPA & Vacant Lot Mortgages
Answer by Mary Beth Guard, BOL Guru Guru BIOS
Question: The bank is making a loan to purchase a vacant lot. We are going to put a mortgage on the lot. The borrowers already own a mobile home and are going to put the mobile on the lot. If we take an additional security interest in the mobile home, does RESPA apply? Does Right of Rescission apply? What about HMDA? I am under the impression that if we don't take a security interest in the mobile home, then none of the above would apply?
Answer: If you are taking a security interest in vacant land only, you are correct. Neither RESPA nor the Right of Resicssion applies, nor does HMDA. For RESPA to apply, the bank must have a mortgage on property that includes a 1- to 4- family dwelling. The only time a vacant land loan would be covered under RESPA is if you are making a construction loan and part of the funds are going to "transfer title to the property to the first user" (which means financing the purchase of the land on which the construction will occur that you are financing. ) This is a different situation, where you are taking a mortgage on the lot and they are putting a mobile home that they own, which you are not getting a lien on, on the property.
The right of rescission applies only to loan where you take a security interest in a consumer's principal dwelling. Again, since you aren't getting a lien on the mobile home, ROR will not apply. HMDA wouldn't apply because this would not fall into the realm of a home purchase, home improvement, or refinance.
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