For which type of properties does RESPA require the use of the Closing Disclosure?

The correct answer is that RESPA requires the use of the Closing Disclosure for one- to four-family residences. The Real Estate Settlement Procedures Act (RESPA) is designed to provide transparency in the closing process for residential real estate transactions. The Closing Disclosure form is specifically mandated for use in residential transactions involving a consumer loan secured by real property, which includes homes that are one to four units in size.

This focus on one- to four-family dwellings stems from RESPA's aim to protect consumers in typical residential lending scenarios, ensuring they receive clear and sufficient information regarding the terms of their mortgage loans and the settlement costs involved. It does not extend to commercial properties or larger multifamily dwellings beyond four units as these transactions often follow different lending practices that may not align with the consumer protection intentions of RESPA.

By understanding this distinction, it becomes clear why the regulation specifically pertains to one- to four-family residences, ensuring consumers in the most common types of home purchases receive the protections afforded by the law.