Have a construction loan to build a 1-4 family home. They currently own the lot. No perm financing commitments from us and loan term is 12 months. RESPA does not apply???

If you don't have a permanent takeout from another lender...RESPA will apply...It will apply on the construction phase and possible permanent phase as well...all within 3 days of the construction application.

Maybe. What's going to happen after the end of the 12 month financing? Just because you don't issue a commitment doesn't mean you won't be doing the permanent financing. In fact, if I were the Sr. Loan Officer and a LO didn't have a commitment from someone else to provide the permanent financing, I would be asking "So how is this loan being paid off? Did you qualify them for permanent financing? Why would we make a 12 month loan with no commitment if we don't think they qualify for permanent financing?"

§1024.5(b)(3) states "The exemption for temporary financing does not apply to a loan made to finance construction of 1- to 4-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender or is used to finance transfer of title to the first user.

they will qualify for perm financing.. we just dont offer long term loans - we will sell it to the secondary market

If you may take the permanent loan for an hour or a minute, you're maybe providing the perm loan, and the fact that you haven't yet committed to doing it is irrelevant, as is the fact that you'll sell it. So you can't treat the construction loan as RESPA-exempt.

If you have a takeout commitment in hand from a third party lender who will do the permanent loan, then you can treat the construction loan as RESPA-exempt.

When we do a construction loan, unless it is by a builder as a spec home, then it is subject to RESPA. Nine times out of ten then end up going through us for the end financing. Very rarely does the loan end up going to another lender, unless like the case of the spec loan.