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(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 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.)
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