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We are working on a loan for a customer purchasing a residential property. The loan will be temporary financing with interest only for 9 months, and then will be transferred to the secondary market for permenant financing. Is this loan exempt from RESPA requirements?
IMO, I say no.
Are you planning on being the lender that originates the loan for the customer throught the secondary market for perm financing? If yes, then you’ll need to do RESPA.
Just to be clear, this loan would not be exempt from RESPA even though it is temporary financing? Also, we will not be the lender that originates the loan through the secondary market for perm financing.
If you’re not the lender/originator on the perm financing, then this is not subject to RESPA. IF you are, then yes it is.
Keep in mind that you should document your file with a take-out or aka commitment letter to show that you are not doing the perm financing. Without this your examiner may view the situation as you committing to doing the perm financing.
Document…Document…Document!
Generally for the temporary loan to be exempt it has to meet all of the conditions:
• It is for temporary financing only. The borrower has a takeout from another lender;
• The borrower already has title to the real property; and
• The term is less than two years.
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