RESPA: Using A Home Equity Loan To Purchase Another Home

See 24 CFR 3500.5 for the definition of coverage of RESPA.

RESPA applies to:

Consumer purpose loans secured by a lien on a 1-4 family real estate on less than 25 acres of land.

RESPA does not apply to:

1. Liens on a residence located on > or = 25 acres (combine all land taken). The home doesn’t have to be on the > 25 acre portion.
2. Business purpose loans (same as Truth in Lending - Regulation Z).
3. Prequalification applications - when a specific property has not been identified.
4. Temporary financing (less than two years), such as a construction loan is exempted from RESPA. However, RESPA does apply if the loan may be converted to permanent financing by the same lender.
5. Home Equity Lines of Credit (technically, RESPA does apply, but no disclosures need be given on HELOCs.)

First published on BankersOnline.com 09/16/02