What circumstance would exempt a transaction from the application of RESPA?

The correct choice, cash transactions, is exempt from the application of the Real Estate Settlement Procedures Act (RESPA) because RESPA primarily regulates federally related mortgage loans. This means that transactions that do not involve a loan—such as those paid for entirely in cash—fall outside the purview of this regulation. Since RESPA aims to provide consumers with information regarding the costs of settlement and to protect them from abusive practices in mortgage lending, transactions that do not employ a mortgage or loan option are not covered under RESPA.

In contrast, federally related mortgage loans, residential property sales, and vacant land deals typically involve some financing mechanism, making them subject to RESPA regulations. RESPA applies specifically to transactions involving federally insured or guaranteed loans, ensuring buyers and sellers are informed about their costs during the settlement process. Thus, understanding the scope of RESPA helps in identifying when it applies and when it does not, such as in cash transactions.