We have a consumer loan which will be coded as land only. The borrowers residence sits on this land, but the appraisal gives it no value, so it will not be included as collateral. The purpose of the loan is to refinance the land. Given the fact that if you ever had to foreclose you can't take the land without the home, is the loan subject to RESPA or rescission?

Look at the lien instrument (the mortgage or trust deed) to determine if you have a lien on and can foreclose on the dwelling. It isn’t how you code the loan that matters. Given that, if the debtor discovers you have coded the loan in such a manner, I believe it would give them an affirmative defense against your foreclosure, because you do not consider that a lien exists on the dwelling. Therefore, there would be a question about good faith on the party of the lender.

As for RESPA and RoR, I think yes, they would be subject to both RESPA and RoR.

I have understood RoR does not apply to bare ground? I have done loans with old homes or mobile homes with no value (indicated in the appraisal also)and I do not use RoR based on bare ground. Am I wrong?

The fact they have no value plays no role in whether the security instrument gives you a security interest in them or not. If the security instrument gives you a security interest in the dwelling and the dwelling is the consumer's current primary residence then the ROR would apply unless it was exempt from the ROR such as a RMT or a business purpose loan.

Ok I did not read the current primary residence part correctly. Sorry. I understand. My loans were NOT the customer's primary residences.

In these situations you still have to take into consideration if the security instrument gives you a security interest in the structure. If the structures are not specifically excluded from the mortgage then you also have flood rules to worry about.

Thanks, We have to order a flood on ALL real estate secured loans regardless. In this case if my deed indicates a legal description, I am thinking that it will include any attatched structures also. So we technically could foreclose on the structures as well. Unless it is a Mobile Home not purged, then it becomes personal property and I believe our Security Inst does not disclose pers property as well as the ground, just the ground indicated in the legal description.