[Title 24 CFR 3500.5]
[Code of Federal Regulations (annual edition) - May 1, 2001 Edition]
[Title 24 - HOUSING AND URBAN DEVELOPMENT]
[Subtitle B - Regulations Relating to Housing and Urban Development]
[Chapter Xx - OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING]
[Part 3500 - REAL ESTATE SETTLEMENT PROCEDURES ACT]
[Sec. 3500.5 - Coverage of RESPA.]
[From the U.S. Government Printing Office]


24HOUSING AND URBAN DEVELOPMENT52001-05-012001-05-01false3500.5Sec. 3500.5HOUSING AND URBAN DEVELOPMENTRegulations Relating to Housing and Urban DevelopmentOFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSINGREAL ESTATE SETTLEMENT PROCEDURES ACT
Sec. 3500.5  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.
    (2) Business purpose loans. An extension of credit primarily for a 
business, commercial, or agricultural purpose, as defined by Regulation 
Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining 
whether the exemption applies.
    (3) Temporary financing. Temporary financing, such as a construction 
loan. 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. 
If a lender issues a commitment for permanent financing, with or without 
conditions, the loan is covered by this part. Any construction loan for 
new or rehabilitated 1- to 4-family residential property, other than a 
loan to a bona fide builder (a person who regularly constructs 1- to 4-
family residential structures for sale or lease), is subject to this 
part if its term is for two years or more. A ``bridge loan'' or ``swing 
loan'' in which a lender takes a security interest in otherwise covered 
1- to 4-family residential property is not covered by RESPA and this 
part.
    (4) Vacant land. Any loan secured by vacant or unimproved property, 
unless within two years from the date of the settlement of the loan, a 
structure or a manufactured home will be constructed or placed on the 
real property using the loan proceeds. If a loan for a structure or 
manufactured home to be placed on vacant or unimproved property will be 
secured by a lien on that property, the transaction is covered by this 
part.
    (5) Assumption without lender approval. Any assumption in which the 
lender does not have the right expressly to approve a subsequent person 
as the borrower on an existing federally related mortgage loan. Any 
assumption in which the lender's permission is both required and 
obtained is covered by RESPA and this part, whether or not the lender 
charges a fee for the assumption.
    (6) Loan conversions. Any conversion of a federally related mortgage 
loan to different terms that are consistent with provisions of the 
original mortgage instrument, as long as a new note

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is not required, even if the lender charges an additional fee for the 
conversion.
    (7) Secondary market transactions. A bona fide transfer of a loan 
obligation in the secondary market is not covered by RESPA and this 
part, except as set forth in section 6 of RESPA (12 U.S.C. 2605) and 
Sec. 3500.21. In determining what constitutes a bona fide transfer, HUD 
will consider the real source of funding and the real interest of the 
funding lender. Mortgage broker transactions that are table-funded are 
not secondary market transactions. Neither the creation of a dealer loan 
or dealer consumer credit contract, nor the first assignment of such 
loan or contract to a lender, is a secondary market transaction (see 
Sec. 3500.2.)

[61 FR 13233, Mar. 26, 1996, as amended at 61 FR 58475, Nov. 15, 1996]