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#655046 - 12/20/06 08:07 PM Would RESPA apply?
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Would RESPA apply in the case of the purchase of a primary residence where the loan is secured by the home being purchased and the former home? I have always considered this a bridge loan, but I have heard differing opinions.

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#655051 - 12/20/06 08:10 PM Re: Would RESPA apply? SuperBanker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
What are the terms of the loan? Based on the limited information it appears you have a loan subject to RESPA.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#655084 - 12/20/06 08:35 PM Re: Would RESPA apply? Dan Persfull
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Let's say that the loan had a 9 month maturity where the borrower would sell their previous home and then term out the remaining balance over 30 years. Would RESPA apply then?

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#655102 - 12/20/06 08:46 PM Re: Would RESPA apply? SuperBanker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
No, based on that information you would have a temporary bridge loan.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#655119 - 12/20/06 08:56 PM Re: Would RESPA apply? Dan Persfull
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What would be the only instance where RESPA would apply in this case? Would the loan have to have a maturity date of two years or greater or be amoritizing for RESPA to apply?

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#655129 - 12/20/06 09:05 PM Re: Would RESPA apply? SuperBanker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:
What would be the only instance where RESPA would apply in this case?


There is not an "only" instance. If your loan was structured where the loan was amortizing and upon sale of the existing home the balance would be paid down and then modified, the original loan would be subject to RESPA IMO.

Quote:
Would the loan have to have a maturity date of two years or greater or be amoritizing for RESPA to apply?


As I've said beofore, don't get hung up on the 2 years. The 2 years applies to construction loans.

....Any construction loan for new or rehabilitated 1- to 4-family residential property, other than a loan to a bona fide builder (a person who regularly constructs 1- to 4- family residential structures for sale or lease), is subject to this part if its term is for two years or more.....
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The opinions expressed are mine and they are not to be taken as legal advice.

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#655160 - 12/20/06 09:21 PM Re: Would RESPA apply? Dan Persfull
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One more scenario. What if we had an interest-only loan that is to mature in 9 months and that had a permanent commitment from our in-house mortgage department in file? Would the temporary financing exemption apply with our in-house mortgage department providing the permanent financing?

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#655175 - 12/20/06 09:28 PM Re: Would RESPA apply? SuperBanker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
No, if you're referring to a construction loan.

Yes, if you're referring to a purchase loan.
Last edited by Dan Persfull; 12/20/06 09:30 PM.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#723382 - 04/27/07 06:00 PM Re: Would RESPA apply? Dan Persfull
Jan94 Offline
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We have a situation where we found that the bank originated a consumer construction loan for 24 months as an open-end loan. Now they want to change this to a closed-end but renew for another 24 months. To me this would be a refinance, but would it still be considered temporary financing for RESPA purposes? The home is not yet complete (it's over a $1MM and taking longer to finish). Thank you.

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#723867 - 04/30/07 02:11 PM Re: Would RESPA apply? Jan94
Jan94 Offline
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If I had paid attention to Dan's response above, I think I would have had my answer. In going back and rereading some more, it would appear that if the construction loan has a term of two years or more, then it is covered by RESPA. I was struggling with the temporary financing definition. So if the loan is exactly 24 months it is a covered loan and temporary financing would not be applicable, is that correct? The majority of our construction loans are 12 months, but I just want to be sure I'm understanding this correctly. Thank you.

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