Which transaction does the Real Estate Settlement Procedures Act (RESPA) NOT apply to?

The Real Estate Settlement Procedures Act (RESPA) is designed to protect consumers by ensuring transparency in the real estate settlement process, primarily for residential transactions involving federally related mortgage loans. This law applies to various types of loans, specifically those that are federally insured, such as FHA-insured loans, VA-guaranteed loans, and conforming loans that are sold to Fannie Mae, which all fall under the category of residential mortgage transactions.

In contrast, the regulations set forth by RESPA do not apply to commercial loans. This differentiation exists because commercial financing typically involves different processes and terms that are not governed by the same consumer protection standards as residential mortgage loans. Therefore, commercial loans are excluded from RESPA’s coverage, allowing for more flexibility and varied practices in the commercial real estate financing arena.