Which type of loans does RESPA regulate?

RESPA, or the Real Estate Settlement Procedures Act, specifically regulates federally related mortgage loans. This includes loans that are intended to finance residential real estate transactions, and they are backed or insured by a federal agency such as the FHA (Federal Housing Administration) or the VA (Department of Veterans Affairs). The purpose of RESPA is to help consumers understand their rights and the costs associated with the mortgage transaction, ensuring transparency in the settlement process and preventing abusive practices.

In contrast, options like loan modifications, small business loans, and personal loans do not fall under the purview of RESPA. Loan modifications are generally handled through different regulatory frameworks. Small business loans and personal loans likewise are not related to the purchase of residential real estate, which is the focus of RESPA's regulations. Hence, understanding that RESPA aims to provide consumer protections specifically in the realm of federally related mortgage loans is key to grasping its scope and importance in the real estate process.