RESPA - Lot Loan Renewal

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Question:

We made a lot loan to a customer five years ago. It is time to renew it, and now the customer has built a second home on the lot, which we did not finance. Do we need to disclose this for RESPA?

Answer:

You have the lot as collateral. When the customer built the home on the lot, I assume you have a security interest in it as well (check your security interest). If the loan is secured by a 1-4 family dwelling, consumer purpose and less than 25 acres, it is subject to RESPA.

First published on BankersOnline.com 8/17/09