Real Estate Settlement Procedures Act applies to which of the following loan types?

• A. Commercial loans for businesses
• B. Loans secured by investment property
• C. All mortgage loans regardless of government involvement
• D. Federally related loans for one- to four-family dwellings

Answer: (D)

RESPA covers loans that are federally related and secured by a dwelling of up to four units that the borrower will use as their residence. That scope is why the description describing federally related loans for one- to four-family dwellings is the one RESPA applies to. The act exists to ensure borrowers receive clear settlement-cost disclosures and to curb abusive practices in the home loan process when there’s federal involvement, such as loans insured or guaranteed by federal programs. Loans for commercial properties or for investment properties, or loans not federally related, don’t fall within RESPA’s protections, since they involve property types or loan circumstances outside its residential, government-related framework.