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When and What: Coverage Rules for Lending Regulations: RESPA

RESPA and Regulation X apply to all federally related mortgage loans, loans secured by a one- to four-family dwelling. The dwelling that secures the loan need not be the applicant's. However, business purpose loans are exempt, even if the loan is made to a natural person. Certain other loans are exempt from RESPA even if they are secured by a dwelling: loans secured by property of 25 or more acres, temporary financing such as a bridge loan or construction loan of less than two years, loan conversions, and sales to the secondary market.

Regulation/Rule Definition/CoverageSpecial Information Booklet Provide one booklet for each application for a federally related mortgage loan except for applications: Good Faith Estimate of settlement services Within three days of application, provide one copy to each applicant for a federally related mortgage loan except for applications:Disclose required service provider When the lender requires the use of a particular provider of a settlement service and requires the borrower to pay for any portion of the cost of the service. Section 3500.7(e)Disclose affiliated business arrangement Whenever making a referral to or influencing the borrower's selection of a settlement service provider with which the lender, a director, or a staff member has an affiliated business arrangement. Section 3500.15(b)HUD-1 Provide in every settlement involving a federally related mortgage loan in which there is both a buyer and a seller. The HUD-1 form may also be used in a transaction where there is no seller (a refinancing). In this case, simply leave the seller column blank. Section 3500.8(a)HUD-1A Provide in a settlement involving a federally related mortgage loan in which there is only a borrower. Section 3500.8(a)Servicing Notice Provide transfer of servicing information on all loans secured by a first lien. Loans secured by a subordinate lien and loans otherwise exempt from RESPA are exempt from the transfer of servicing notice requirement. Section 3500.21(a)Escrow Notice Any account that a servicer establishes or controls, in connection with a federally related mortgage loan, on behalf of a borrower to pay taxes, insurance premiums, or other charges including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay. Section 3500.17(b)
Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 18 & 19, 12/96

First published on 12/01/1996

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