Which loans RESPA reaches: 12 CFR §1024.5, the coverage section, quoted in full

The coverage section of Regulation X, the definition of "federally related mortgage loan" it is written against, six other defined terms those paragraphs use, the one official comment on the section, and the three Regulation Z comments on business-purpose credit that a rental-property loan runs into — quoted from eCFR, with the date we read them. The explanation between the quotes is ours. General information, not legal advice.

Published September 15, 2026 · Updated September 20, 2026

Somebody on a deal says "RESPA doesn't apply here" and somebody else is not sure. It comes up when a buyer is paying cash and the title company still sends a settlement statement; when a seller carries the financing on a land contract or contract for deed; when a lot is bought with a loan and the house "will go up next year"; when a buyer takes over the seller's existing mortgage; and when an investor's lender calls the loan on a fourplex a business-purpose loan.

Every one of those runs into the same section of Regulation X — 12 C.F.R. §1024.5, "Coverage of RESPA" — and the section is short enough to print whole. Its applicability sentence is one line; the rest is the exemptions, four paragraphs on State law, and a partial exemption. The catch is that the one line is written against a defined phrase, "federally related mortgage loan", whose definition lives in a different section, §1024.2, and is not short — and is printed anyway. So this page quotes the section, the definition and six other defined terms those paragraphs use, each whole, across the sections below, together with the one official comment on the section and three of the Regulation Z comments a rental-property loan runs into under the business-purpose exemption. The paragraphs are the answer; the explanation between them is ours.

1. The applicability sentence, and the two carve-outs it announces

§1024.5(a) is one sentence and it is quoted below whole. RESPA and "this part" — Regulation X, 12 C.F.R. part 1024 — apply to federally related mortgage loans, "except as provided in paragraphs (b) and (d) of this section". That is the entire coverage rule: a defined phrase and two carve-outs. Paragraph (b) is the exemptions; paragraph (d) is a partial exemption from five named sections. Both are quoted whole later on this page.

The sentence does not say what a federally related mortgage loan is. §1024.2(a), also quoted below, says where to look: terms defined in RESPA itself carry their statutory meaning "unless otherwise defined in paragraph (b) of this section or elsewhere in this part". The phrase is defined in §1024.2(b), so for the purposes of part 1024 that definition is the one §1024.5(a) is read against, and it is the subject of the next section. The statute's own definition, 12 U.S.C. §2602(1), is quoted whole on the RESPA section-8 page of this site and is not repeated here.

(a) is written about loans, and so is the definition: each of its three paragraphs, quoted next, is written about a loan. The first of the opening situations — a purchase paid in cash, with no loan in it — runs into exactly this sentence, and this page stops where the words stop.

What the regulation says

  • “Applicability. RESPA and this part apply to federally related mortgage loans, except as provided in paragraphs (b) and (d) of this section.”

    — 12 CFR §1024.5(a), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section or elsewhere in this part.”

    — 12 CFR §1024.2(a), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026

Applies to

“federally related mortgage loans”

A defined phrase. §1024.2(a) says the part’s own definition governs where one exists, and one does.

Carve-out one — paragraph (b)

The exemptions: seven numbered slots, one printed “[Reserved]”.

Carve-out two — paragraph (d)

The partial exemptions: five named sections switched off for two classes of loan.

§1024.5(a) is quoted whole above; its words for the two carve-outs are “except as provided in paragraphs (b) and (d) of this section”. The phrase it turns on is defined in §1024.2(b), quoted in the next section; the two carve-outs are quoted in sections 3 through 6 and section 8.

3. The seven exemption slots, and the first two: a reserved paragraph, and business-purpose loans with the Regulation Z comments on rental property

Paragraph (b) carries the run-in heading "Exemptions." and seven numbered paragraphs. eCFR renders the heading on a line of its own, so it is named here and not quoted; the seven paragraphs are quoted whole, two in this section and five in the three that follow. The first, (b)(1), prints "[Reserved]" and nothing else.

(b)(2) is the business-purpose exemption, and it does not define the phrase. It exempts an extension of credit "primarily for a business, commercial, or agricultural purpose, as defined by 12 CFR 1026.3(a)(1) of Regulation Z", and its second sentence says persons may rely on Regulation Z in deciding whether the exemption applies. So the words that decide it are Regulation Z's. §1026.3 opens with a chapeau introducing paragraphs (a) through (i); (a) carries the run-in heading "Business, commercial, agricultural, or organizational credit." ahead of its first child; and (a)(1) — the one paragraph §1024.5(b)(2) names — is one line: "An extension of credit primarily for a business, commercial or agricultural purpose." The chapeau and (a)(1) are quoted below; (a)(2) and (b) through (i) are not, because §1024.5 does not point at them.

What "primarily" means, the paragraph does not say. Regulation Z's official interpretation does, in ten comments under 3(a), and three of them are quoted below because the fifth of this page's opening situations — a loan on a fourplex the lender calls business-purpose — runs straight into them. Comment 3(a)-1 puts the determination on the creditor "in each case". Comment 3(a)-4 is keyed to occupancy: credit to acquire, improve or maintain rental property that is not owner-occupied "is deemed to be for business purposes", "regardless of the number of housing units", with a fourteen-day occupancy test written into it. Comment 3(a)-5 is for rental property that is or will be owner-occupied within the coming year, and its two rules are keyed to a unit count and to what the credit is for: to acquire, more than 2 housing units; to improve or maintain, more than 4. Its last two sentences say what the unit rules do not decide — a loan on fewer units is not "necessarily consumer credit" — and point at the factors in comment 3(a)-3, which this page names and does not quote, along with 3(a)-2 and 3(a)-6 through 3(a)-10.

What the rule and its official interpretation say

  • “[Reserved]”

    — 12 CFR §1024.5(b)(1), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by 12 CFR 1026.3(a)(1) of Regulation Z. Persons may rely on Regulation Z in determining whether the exemption applies.”

    — 12 CFR §1024.5(b)(2), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “The following transactions are not subject to this part or, if the exemption is limited to specified provisions of this part, are not subject to those provisions:”

    — 12 CFR §1026.3, www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-A/section-1026.3, read September 20, 2026

  • “An extension of credit primarily for a business, commercial or agricultural purpose.”

    — 12 CFR §1026.3(a)(1), www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-A/section-1026.3, read September 20, 2026

  • “Primary purposes. A creditor must determine in each case if the transaction is primarily for an exempt purpose. If some question exists as to the primary purpose for a credit extension, the creditor is, of course, free to make the disclosures, and the fact that disclosures are made under such circumstances is not controlling on the question of whether the transaction was exempt. (See comment 3(a)-2, however, with respect to credit cards.)”

    — 12 CFR pt. 1026, Supp. I, comment 3(a)-1, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026

  • “Non-owner-occupied rental property. Credit extended to acquire, improve, or maintain rental property (regardless of the number of housing units) that is not owner-occupied is deemed to be for business purposes. This includes, for example, the acquisition of a warehouse that will be leased or a single-family house that will be rented to another person to live in. If the owner expects to occupy the property for more than 14 days during the coming year, the property cannot be considered non-owner-occupied and this special rule will not apply. For example, a beach house that the owner will occupy for a month in the coming summer and rent out the rest of the year is owner occupied and is not governed by this special rule. (See comment 3(a)-5, however, for rules relating to owner-occupied rental property.)”

    — 12 CFR pt. 1026, Supp. I, comment 3(a)-4, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026

  • “Owner-occupied rental property. If credit is extended to acquire, improve, or maintain rental property that is or will be owner-occupied within the coming year, different rules apply:”

    — 12 CFR pt. 1026, Supp. I, comment 3(a)-5, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026

  • “Credit extended to acquire the rental property is deemed to be for business purposes if it contains more than 2 housing units.”

    — 12 CFR pt. 1026, Supp. I, comment 3(a)-5.i, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026

  • “Credit extended to improve or maintain the rental property is deemed to be for business purposes if it contains more than 4 housing units. Since the amended statute defines dwelling to include 1 to 4 housing units, this rule preserves the right of rescission for credit extended for purposes other than acquisition. Neither of these rules means that an extension of credit for property containing fewer than the requisite number of units is necessarily consumer credit. In such cases, the determination of whether it is business or consumer credit should be made by considering the factors listed in comment 3(a)-3.”

    — 12 CFR pt. 1026, Supp. I, comment 3(a)-5.ii, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026

Paragraph (b), “Exemptions.” — seven slots

  • (b)(1) — [Reserved]Quoted whole in section 3.
  • (b)(2) — Business purpose loans.Quoted whole in section 3.
  • (b)(3) — Temporary financing.Quoted whole in section 4.
  • (b)(4) — Vacant land.Quoted whole in section 4.
  • (b)(5) — Assumption without lender approval.Quoted whole in section 5.
  • (b)(6) — Loan conversions.Quoted whole in section 5.
  • (b)(7) — Secondary market transactions.Quoted whole in section 6.
The middle column is each paragraph’s own run-in heading as eCFR prints it; the paragraphs are quoted whole in the sections named. A heading is a locator, not a summary — (b)(3)’s carve-backs run longer than its exemption clause.

4. Temporary financing and vacant land: the two exemptions that carry a "two years" marker

(b)(3) is the longest paragraph in the section and it is written as an exemption followed by carve-backs. The exemption is one clause — "Temporary financing, such as a construction loan" — and the rest of the paragraph takes cases back out of it. The exemption does not apply to a loan financing 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. A lender's commitment for permanent financing, "with or without conditions", makes the loan covered. A construction loan for new or rehabilitated 1- to 4-family residential property — other than a loan to a "bona fide builder", which the paragraph defines in a parenthetical — is subject to the part "if its term is for two years or more". The last sentence goes the other way: a "bridge loan" or "swing loan" secured by otherwise covered 1- to 4-family property is not covered.

(b)(4) is two sentences. A loan secured by vacant or unimproved property is exempt "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". The second sentence speaks to a loan for a structure or manufactured home to be placed on such property that will be secured by a lien on the property: covered. "Settlement" and "manufactured home" are both defined terms — "Settlement" is quoted below, "Manufactured home" in section 2.

Both paragraphs carry a "two years" marker, and the two markers measure different things and both point toward coverage. In (b)(3) it is the term of the construction loan: two years or more, and the loan is subject to the part. In (b)(4) it is the time from settlement to construction: a structure within two years, and the exemption does not apply. (b)(4) does not say what happens when a planned build slips past two years after settlement, and this page does not either.

What the regulation says

  • “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.”

    — 12 CFR §1024.5(b)(3), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “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.”

    — 12 CFR §1024.5(b)(4), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Settlement means the process of executing legally binding documents regarding a lien on property that is subject to a federally related mortgage loan. This process may also be called “closing” or “escrow” in different jurisdictions.”

    — 12 CFR §1024.2(b), “Settlement”, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026

Worked example

Counting the two "two years" markers on a hypothetical file: three steps

  1. A hypothetical loan secured by a vacant lot settles on March 10, 2026. (b)(4) counts "within two years from the date of the settlement of the loan" — "Settlement" is the defined term quoted in this section — and two years from March 10, 2026 is March 10, 2028. The paragraph does not say whether that day itself is "within" the two years, so the dates below stay clear of it.
  2. The buyer plans to break ground in October 2027. That is inside the window, so the facts run into the condition (b)(4) writes — "a structure or a manufactured home will be constructed or placed on the real property using the loan proceeds" — and whether those words are met is a question about the plan and the proceeds, not about the calendar. A plan to break ground in June 2028 is outside the window on its face.
  3. A separate construction loan on a one-to-four-family house is written with a 24-month term. (b)(3)'s marker is the term of the loan — "if its term is for two years or more" — and twenty-four months is two years. An 18-month term does not meet that sentence on its own; the sentence also excepts a loan to a "bona fide builder", and the paragraph's other carve-backs — a commitment for permanent financing "with or without conditions", a loan that "is used as, or may be converted to, permanent financing by the same lender" — are written on different facts and are not answered by counting months. Neither count is a verdict on any file.

(b)(3) — an exemption, three carve-backs, one sentence the other way

  • The exemption“Temporary financing, such as a construction loan.”
  • Carve-back 1not for a 1- to 4-family construction loan used as, or convertible to, permanent financing by the same lender, or used to finance transfer of title to the first user
  • Carve-back 2a lender’s commitment for permanent financing, “with or without conditions” — covered
  • Carve-back 3a 1- to 4-family construction loan (other than to a “bona fide builder”) “is subject to this part if its term is for two years or more”
  • The other waya “bridge loan” or “swing loan” on otherwise covered 1- to 4-family property — not covered

Its “two years” is the loan’s term.

(b)(4) — an exemption with an “unless”

A loan secured by vacant or unimproved property is exempt “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”. The second sentence: a loan for a structure or manufactured home to be placed there, secured by a lien on the property, is covered.

Its “two years” runs from settlement to construction.

Both paragraphs are quoted whole above.

5. Assumptions and loan conversions: one keyed to the lender's right to approve, one to the original paper

(b)(5) is two sentences describing two situations. The first is the exemption: an 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. The second is the case the exemption does not reach: an assumption in which the lender's permission is "both required and obtained" is covered, "whether or not the lender charges a fee for the assumption". The words that separate the two are a right to approve, and a permission required and obtained. The paragraph does not define "assumption", and §1024.2(b) does not either.

(b)(6) is one sentence. A conversion of a federally related mortgage loan to different terms is exempt if the new terms are "consistent with provisions of the original mortgage instrument", "as long as a new note is not required", and, the paragraph adds, "even if the lender charges an additional fee for the conversion". Two conditions, both about the paper: consistency with the original instrument, and no new note. The fee is stated not to matter in either paragraph.

Both paragraphs speak of a loan that already exists — "an existing federally related mortgage loan" in (b)(5), "a federally related mortgage loan" being converted in (b)(6) — so each presupposes that the definition in section 2 was satisfied once. Whether it was, in any given file, is not something this page decides.

"The lender", whose right to approve (b)(5) turns on, is a defined term with a four-sentence definition, quoted below. Its second and third sentences say who the lender is in a table-funded loan and in a dealer loan, and its last sentence points back at §1024.5(b)(7).

What the regulation says

  • “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.”

    — 12 CFR §1024.5(b)(5), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “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.”

    — 12 CFR §1024.5(b)(6), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Lender means, generally, the secured creditor or creditors named in the debt obligation and document creating the lien. For loans originated by a mortgage broker that closes a federally related mortgage loan in its own name in a table funding transaction, the lender is the person to whom the obligation is initially assigned at or after settlement. A lender, in connection with dealer loans, is the lender to whom the loan is assigned, unless the dealer meets the definition of creditor as defined under “federally related mortgage loan” in this section. See also § 1024.5(b)(7), secondary market transactions.”

    — 12 CFR §1024.2(b), “Lender”, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026

(b)(5) — two sentences, two situations

  • Exemptthe lender “does not have the right expressly to approve a subsequent person as the borrower”
  • Coveredthe lender’s permission “is both required and obtained” — “whether or not the lender charges a fee”

(b)(6) — one sentence, two conditions about the paper

A conversion to different terms is exempt if the terms are “consistent with provisions of the original mortgage instrument” and “a new note is not required” — “even if the lender charges an additional fee”.

Both paragraphs are quoted whole above. The fee is stated not to matter in either.

6. Secondary market transactions: an exemption with its own exception, and three things it says are not one

(b)(7) exempts "a bona fide transfer of a loan obligation in the secondary market" — with an exception written into the same sentence: "except with respect to RESPA (12 U.S.C. 2605) and subpart C of this part (§§ 1024.30-1024.41)". Both are named on this page and not quoted. The paragraph's second sentence says what the Bureau will look at in deciding whether a transfer is bona fide: "the real source of funding and the real interest of the funding lender".

The last two sentences name three things that are NOT secondary market transactions: a mortgage broker transaction that is table-funded; the creation of a dealer loan or dealer consumer credit contract; and the first assignment of such a loan or contract to a lender. The paragraph ends "(see § 1024.2)". Two of the definitions those sentences turn on, "Table funding" and "Mortgage broker", are quoted below whole; the "Table funding" definition points back at (b)(7) in its own last sentence. The other two, "Dealer" and "Dealer loan or dealer consumer credit contract", are named here and not quoted.

What the regulation says

  • “Secondary market transactions. A bona fide transfer of a loan obligation in the secondary market is not covered by RESPA and this part, except with respect to RESPA (12 U.S.C. 2605) and subpart C of this part (§§ 1024.30-1024.41). In determining what constitutes a bona fide transfer, the Bureau 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 § 1024.2).”

    — 12 CFR §1024.5(b)(7), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Table funding means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. A table-funded transaction is not a secondary market transaction (see § 1024.5(b)(7)).”

    — 12 CFR §1024.2(b), “Table funding”, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026

  • “Mortgage broker means a person (other than an employee of a lender) that renders origination services and serves as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan, including such a person that closes the loan in its own name in a table-funded transaction.”

    — 12 CFR §1024.2(b), “Mortgage broker”, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026

7. What the section says about State law: preempted only to the extent of the inconsistency

Paragraph (c) carries the run-in heading "Relation to State laws." and four numbered paragraphs, all quoted below; the heading is named, not quoted, for the reason given in section 3. (c)(1) is the rule and it has two sentences that pull in opposite directions. State laws inconsistent with RESPA or the part are preempted "to the extent of the inconsistency" — and then: RESPA and the regulations "do not annul, alter, affect, or exempt any person subject to their provisions from complying with the laws of any State with respect to settlement practices, except to the extent of the inconsistency". The same phrase closes both sentences. On the face of (c)(1), a State settlement law is displaced where it conflicts, and only there.

(c)(2) authorises the Bureau, on request by any person, to determine whether an inconsistency exists, consulting appropriate federal agencies. Its two sub-paragraphs limit what the Bureau may find. Under (c)(2)(i) it may not find a State law or regulation inconsistent if it determines that the law "gives greater protection to the consumer". Under (c)(2)(ii), for State provisions on affiliated business arrangements, it may not construe provisions that "impose more stringent limitations" as inconsistent "so long as they give more protection to consumers and/or competition". (c)(3) is the procedure — what a request contains, and that a determination is made by notice in the Federal Register — and it ends with a definition of "Law" for the section that reaches regulations and any enactment with the force of law issued by a State or a political subdivision. (c)(4) is one sentence pointing at §1024.33(d), named here and not quoted.

Regulation X has an official interpretation, Supplement I to part 1024, and it carries exactly one comment on §1024.5: comment 5(c)(1)-1, quoted below whole. Its three sentences track (c)(1) and (c)(2)(i) — inconsistent State laws "may be" preempted; State laws giving greater protection to consumers "are not inconsistent with and are not preempted by" RESPA or Regulation X — and then add a sentence with no counterpart in the section: nothing in RESPA or Regulation X "should be construed to preempt the entire field" of the practices they cover, "including the regulations in Subpart C with respect to mortgage servicers or mortgage servicing". No other paragraph of §1024.5 has a comment.

This page names no State's settlement law and describes none. Paragraph (c) speaks to State law as a category, and so does this page.

What the rule and its official interpretation say

  • “State laws that are inconsistent with RESPA or this part are preempted to the extent of the inconsistency. However, RESPA and these regulations do not annul, alter, affect, or exempt any person subject to their provisions from complying with the laws of any State with respect to settlement practices, except to the extent of the inconsistency.”

    — 12 CFR §1024.5(c)(1), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Upon request by any person, the Bureau is authorized to determine if inconsistencies with State law exist; in doing so, the Bureau shall consult with appropriate Federal agencies.”

    — 12 CFR §1024.5(c)(2), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “The Bureau may not determine that a State law or regulation is inconsistent with any provision of RESPA or this part, if the Bureau determines that such law or regulation gives greater protection to the consumer.”

    — 12 CFR §1024.5(c)(2)(i), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “In determining whether provisions of State law or regulations concerning affiliated business arrangements are inconsistent with RESPA or this part, the Bureau may not construe those provisions that impose more stringent limitations on affiliated business arrangements as inconsistent with RESPA so long as they give more protection to consumers and/or competition.”

    — 12 CFR §1024.5(c)(2)(ii), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “Any person may request the Bureau to determine whether an inconsistency exists by submitting to the address established by the Bureau to request an official interpretation, a copy of the State law in question, any other law or judicial or administrative opinion that implements, interprets or applies the relevant provision, and an explanation of the possible inconsistency. A determination by the Bureau that an inconsistency with State law exists will be made by publication of a notice in the Federal Register. “Law” as used in this section includes regulations and any enactment which has the force and effect of law and is issued by a State or any political subdivision of a State.”

    — 12 CFR §1024.5(c)(3), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “A specific preemption of conflicting State laws regarding notices and disclosures of mortgage servicing transfers is set forth in § 1024.33(d).”

    — 12 CFR §1024.5(c)(4), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “State laws that are inconsistent with the requirements of RESPA or Regulation X may be preempted by RESPA or Regulation X. State laws that give greater protection to consumers are not inconsistent with and are not preempted by RESPA or Regulation X. In addition, nothing in RESPA or Regulation X should be construed to preempt the entire field of regulation of the practices covered by RESPA or Regulation X, including the regulations in Subpart C with respect to mortgage servicers or mortgage servicing.”

    — 12 CFR pt. 1024, Supp. I, comment 5(c)(1)-1, www.ecfr.gov/current/title-12/chapter-X/part-1024, read September 20, 2026

(c)(1) — the same phrase closes both sentences

Inconsistent State laws are preempted “to the extent of the inconsistency” — and RESPA and the regulations do not exempt anyone from State settlement law “except to the extent of the inconsistency”.

(c)(2) — what the Bureau may not find

  • (c)(2)(i)no finding of inconsistency where the State law “gives greater protection to the consumer”
  • (c)(2)(ii)for affiliated business arrangements, “more stringent limitations” are not construed as inconsistent “so long as they give more protection to consumers and/or competition”

(c)(3) is the request procedure; (c)(4) points at §1024.33(d), named on this page and not quoted. Comment 5(c)(1)-1, quoted above, adds that nothing in RESPA or Regulation X “should be construed to preempt the entire field”.

All four numbered paragraphs of (c) are quoted whole above. This page names no State’s settlement law.

8. The partial exemptions: five sections switched off for two classes of loan

Paragraph (d) is a chapeau and two children, quoted below together. The chapeau names five sections — §§1024.6, 1024.7, 1024.8, 1024.10 and 1024.33(a) — and says they "do not apply to a federally related mortgage loan" that meets either of two descriptions. The five sections are named on this page and not quoted. The two descriptions are joined by "or".

(d)(1) is a loan "subject to the special disclosure requirements for certain consumer credit transactions secured by real property set forth in Regulation Z, 12 CFR 1026.19(e), (f), and (g)". Those three paragraphs are named here and not quoted; the Closing Disclosure three-day-rule page on this site quotes provisions of §1026.19(e) and (f), and is linked below. (d)(2) is a loan that "satisfies the criteria in Regulation Z, 12 CFR 1026.3(h)", which is named here and not quoted.

Note what (d) is not. It is not a paragraph-(b) exemption: its chapeau ends with the phrase "federally related mortgage loan", so a loan it describes is by hypothesis one the definition in section 2 reaches. It switches off five named sections for such a loan; the rest of the part is not mentioned by (d).

What the regulation says

  • “Partial exemptions for certain mortgage loans. Sections 1024.6, 1024.7, 1024.8, 1024.10, and 1024.33(a) do not apply to a federally related mortgage loan:”

    — 12 CFR §1024.5(d), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “That is subject to the special disclosure requirements for certain consumer credit transactions secured by real property set forth in Regulation Z, 12 CFR 1026.19(e), (f), and (g); or”

    — 12 CFR §1024.5(d)(1), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

  • “That satisfies the criteria in Regulation Z, 12 CFR 1026.3(h).”

    — 12 CFR §1024.5(d)(2), www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026

“do not apply to a federally related mortgage loan:”

  • §1024.6
  • §1024.7
  • §1024.8
  • §1024.10
  • §1024.33(a)

Five sections, named as locators. The rest of part 1024 is not mentioned by (d).

(d)(1) “or” (d)(2)

  • (d)(1) a loan subject to the special disclosure requirements in Regulation Z, 12 CFR 1026.19(e), (f) and (g)
  • (d)(2) a loan that satisfies the criteria in Regulation Z, 12 CFR 1026.3(h)
Paragraph (d) is quoted whole above with (d)(1) and (d)(2). Nothing here says what any of the five sections requires, or what the criteria in §1026.3(h) are.

Where each of the opening situations lands in the text

This page opened with five situations. The figure below names the paragraphs each one runs into, so the reading starts in the right place instead of at a search result. None of the rows is a verdict; each stops at the words.

The situation, and the paragraphs it runs into

  • The buyer paying cash, and the settlement statement that still arrives§1024.5(a) (the phrase it turns on), then the definition in §1024.2(b) — each of whose three paragraphs is written about a loan. Whether anything else on the file is a loan is not decided here
  • The seller carrying a land contract or contract for deedThe definition’s paragraph (2): a condition keyed to whether the contract is “funded in whole or in part by proceeds of a loan” from a maker in (1)(ii)(A) through (D)
  • The lot loan for a house that “will go up next year”§1024.5(b)(4), with its “unless within two years from the date of the settlement of the loan”; and §1024.5(b)(3) if the later loan is a construction loan
  • The buyer taking over the seller’s existing mortgage§1024.5(b)(5): the lender’s “right expressly to approve”, and permission “both required and obtained”
  • The investor’s loan on a fourplex that the lender calls business-purpose§1024.5(b)(2), which names 12 CFR 1026.3(a)(1) and says persons may rely on Regulation Z; then Regulation Z’s comments 3(a)-4 (occupancy) and 3(a)-5 (unit count, acquire vs improve or maintain), all quoted above — and comment 3(a)-3, which 3(a)-5 points at and this page does not quote
The right column is paragraph designators and the words they point at, all printed above. No row is a verdict.

Checking the quotes, and what they do not cover

§1024.5 has four lettered paragraphs, (a) through (d). This page quotes every paragraph of it: (a); (b)(1) through (b)(7); (c)(1), (c)(2), (c)(2)(i), (c)(2)(ii), (c)(3) and (c)(4); and (d), (d)(1) and (d)(2) — seventeen quotations. From §1024.2 it quotes paragraph (a) and seven defined terms of paragraph (b), one of them, "federally related mortgage loan", in a chapeau and fifteen units — twenty-three quotations. From §1026.3 it quotes the chapeau and (a)(1) — two. From Supplement I to part 1024 it quotes the one comment on §1024.5, comment 5(c)(1)-1. From Supplement I to part 1026 it quotes comments 3(a)-1, 3(a)-4 and 3(a)-5 with its i and ii — five. Forty-eight in all. Everything else those paragraphs point at is named in the figure below and quoted nowhere on this page.

Every quote comes from eCFR's current text of the three sections and the two supplements, read paragraph by paragraph, and eCFR states an "as of" date for the whole title which is printed beside each entry in the source list below. Each quote also carries the date it was loaded.

Real Deal Pro, Inc. is a software company. It is not a lender, not a settlement agent, not a real estate brokerage and not a law firm. The gap between "the regulation says this" and "so RESPA does not apply to this closing" is exactly the gap a lawyer is for.

Named on this page, quoted nowhere on it

  • The rest of part 1024§1024.1, §1024.3, §1024.4, §1024.6 through §1024.41 (including §§1024.6, 1024.7, 1024.8, 1024.10 and 1024.33(a), named by (d); §1024.33(d), named by (c)(4); and subpart C, named by (b)(7)), and every §1024.2(b) definition other than the seven quoted — “Refinancing”, “Dealer” and “Dealer loan or dealer consumer credit contract” among them. Named as locators; not one word of any of them is quoted and nothing here says what they provide
  • The rest of Regulation Z12 CFR 1026.3(a)(2) and 1026.3(b) through (i) — including (h), named by (d)(2) — and 12 CFR 1026.19(e), (f) and (g), named by (d)(1). Named, not quoted, and nothing here says what any of them requires
  • The rest of Regulation Z’s official commentaryComments 3(a)-2, 3(a)-3, and 3(a)-6 through 3(a)-10 — seven of the ten comments under 3(a) — and everything from 3(b) on. Named, not quoted. (The three quoted above name 3(a)-2 and 3(a)-3 in their own words.)
  • The statute12 U.S.C. §2601 and following, including §2602 (quoted whole on the section-8 page of this site), §2605 (named inside (b)(7)) and §2606. Not quoted on this page, and nothing here says what §2605 or §2606 provides
  • 15 U.S.C. 1602(g) and 24 CFR 3280.2Named inside two definitions printed above. Neither is quoted here
  • State lawNamed as a category, as paragraph (c) names it. This page names no State’s settlement law, quotes none and describes none
Naming a document locates it; it says nothing about what the document contains. Each row below is named on this page and quoted nowhere on it.

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Wrapping up

The section at the centre of this page is one sentence with two carve-outs: RESPA and Regulation X apply to federally related mortgage loans, except as paragraphs (b) and (d) provide. The phrase is defined in §1024.2(b), the definition is quoted whole above, and each of its three paragraphs is written about a loan — a lien on one-to-four-family residential property or a manufactured home, satisfying one of six lender-or-destination paragraphs; an installment sales contract, land contract or contract for deed funded by a maker in four of those paragraphs, (A) through (D); and not on property outside a State.

Paragraph (b) holds six exemptions and one reserved slot, and the exemptions are narrower than their headings: temporary financing with three carve-backs and a bridge-loan sentence running the other way, vacant land with a two-year condition, assumptions keyed to the lender's right to approve, conversions keyed to the original instrument and the absence of a new note, and secondary-market transfers with an exception written into the same sentence. Paragraph (c) preempts State settlement law only to the extent of an inconsistency, and paragraph (d) switches off five named sections for two classes of loan the definition already reaches. All of it is printed above, and the paragraphs — not this summary — are the text.

Next step

§1024.5(c)(2)(ii), quoted above, is the one paragraph of the coverage section that names affiliated business arrangements, and the section that governs them — with the disclosure form it points at — is quoted whole on its own page.

The affiliated business arrangement disclosure: 12 CFR §1024.15 and appendix D, quoted whole

Sources

Every quotation above is taken from the documents below, on the date shown; the explanation around each quote is ours. Statutes are amended and uniform acts are revised — check the current text before relying on any of it.

  1. 12 CFR §1024.5 — Coverage of RESPA (eCFR, current as of September 17, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.5, read September 20, 2026
  2. 12 CFR §1024.2 — Definitions (eCFR, current as of September 17, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read September 20, 2026
  3. 12 CFR §1026.3 — Exempt transactions (eCFR, current as of September 17, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-A/section-1026.3, read September 20, 2026
  4. 12 CFR pt. 1026, Supplement I — Official Interpretations (eCFR, current as of September 17, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1026/appendix-Supplement%20I%20to%20Part%201026, read September 20, 2026
  5. 12 CFR pt. 1024, Supplement I — Official Bureau Interpretations (eCFR, current as of September 17, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024, read September 20, 2026