When is a loan not subject to RESPA?

A loan is not subject to the Real Estate Settlement Procedures Act (RESPA) when the property will be used for commercial purposes. RESPA's main objective is to protect consumers during the settlement process of residential properties by requiring clear disclosures regarding the loan process, settlement costs, and affiliated business arrangements.

RESPA applies specifically to loans secured by residential real estate that is intended for occupancy as a primary residence or as a second home. This includes properties that are utilized for personal or family purposes. In contrast, if a property is designated for commercial use, it falls outside the jurisdiction of RESPA since the regulations are aimed at ensuring transparency and protection for consumers in residential transactions rather than in commercial ones. Thus, the correct answer reflects that commercial property loans do not have the same consumer protections established by RESPA, which inherently makes them exempt from the Act's requirements.