Mixed collateral types for a mortgage loan

We have a customer who would like a mortgage loan for their primary residence but needs additional collateral for the loan. They own some farm ground and will provide this as additional collateral - 30 acres.

Does RESPA apply since it is their primary residence or not since the loan will be partially secured by land over 25 acres?

Because the primary residence is part of the total collateral, RESPA would apply.

Now I am confused. I didn't think the collateral needed to be contiguous to make it exempt from RESPA over 25 acres total?

It doesn't need to be contiguious. And I don't think that's what Doug meant. Because the house is not on the 25 acres....in other words, you have two pieces of collateral, RESPA would apply.

§ 1024.5 Coverage of RESPA.
(a) Applicability. RESPA and this part apply to all federally related mortgage loans, except for the exemptions provided in paragraph (b) of this section.
(b) Exemptions. (1) A loan on property of 25 acres or more.

Your loan is secured by a house, thus making it a federally related mortgage loan. The acreage is a separate piece of collateral.

That's just my conservative interpretation. If anyone disagrees, please speak up.

You are correct. If the loan is secured by 25 or more acres RESPA does not apply.

Whelp, the guru speaks and I stand corrected. Hey, is your smile corrected, Mr. Persfull?

Dan...thanks from all of us who were confused on that point. I did notice that you had a prior posting on the subject that explains more:

Under current interpretations the acreage does not have to be contiguous. Once the CFPB delves into it that may change.

The following is an email I received in 2005 from: jennifer_a._wharton@hud.gov; on behalf of; hsgrespa@hud.gov

Does this exemption apply to a single parcel or to multiple parcels? Does the parcel single or multiple have property on it? RESPA does not specifically address "parcels of land", but applies to the property that secures the loan.

1. A purchase, or refinance of a 27 acre parcel containing a 1-4 residential dwelling. This transaction would be exempt based on 3500.5(b)(1). Yes, more than 25 acres. RESPA applies to mortgage loans. If the loan is secured by a lien on property and the property securing that loan is 25 acres or more, it is exempt.

2. A purchase, or refinance of a 15 acre parcel containing a 1-4 residential dwelling and an additional 15 acre parcel of land only (total acreage equals 30). The loan's purpose is not for an agricultural purpose or qualifies for any other exemption. Would this transaction be exempt from RESPA requirements based on 3500.5(b)(1)? Yes. If the loan is secured by a lien on property and the property securing that loan is 25 acres or more, it is exempt.