When and What: Coverage Rules for Lending Regulations: RESPA

RESPA and Regulation X apply to all federally related mortgage loans, loans secured by a one- to four-family dwelling. The dwelling that secures the loan need not be the applicant's. However, business purpose loans are exempt, even if the loan is made to a natural person. Certain other loans are exempt from RESPA even if they are secured by a dwelling: loans secured by property of 25 or more acres, temporary financing such as a bridge loan or construction loan of less than two years, loan conversions, and sales to the secondary market.

Regulation/Rule Definition/Coverage Special Information Booklet Provide one booklet for each application for a federally related mortgage loan except for applications: Good Faith Estimate of settlement services Within three days of application, provide one copy to each applicant for a federally related mortgage loan except for applications: Disclose required service provider When the lender requires the use of a particular provider of a settlement service and requires the borrower to pay for any portion of the cost of the service. ?3500.7(e) Disclose affiliated business arrangement Whenever making a referral to or influencing the borrower's selection of a settlement service provider with which the lender, a director, or a staff member has an affiliated business arrangement. ?3500.15(b) HUD-1 Provide in every settlement involving a federally related mortgage loan in which there is both a buyer and a seller. The HUD-1 form may also be used in a transaction where there is no seller (a refinancing). In this case, simply leave the seller column blank. ?3500.8(a) HUD-1A Provide in a settlement involving a federally related mortgage loan in which there is only a borrower. ?3500.8(a) Servicing Notice Provide transfer of servicing information on all loans secured by a first lien. Loans secured by a subordinate lien and loans otherwise exempt from RESPA are exempt from the transfer of servicing notice requirement. ?3500.21(a) Escrow Notice Any account that a servicer establishes or controls, in connection with a federally related mortgage loan, on behalf of a borrower to pay taxes, insurance premiums, or other charges including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay. ?3500.17(b)
Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 18 & 19, 12/96