REAL ESTATE SETTLEMENT PROCEDURES ACT Including all of the Latest Revisions and Amendments, as of 03/18/05

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respa statute real estate settlement procedures act

Title 24--Housing and Urban Development CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT
		3500.1	Designation.
		3500.2	Definitions.
		3500.3	Questions or suggestions from public and copies of public guidance documents.
		3500.4	Reliance upon rule, regulation or interpretation by HUD.
		3500.5	Coverage of RESPA.
		3500.6	Special information booklet at time of loan application.
		3500.7	Good faith estimate.
		3500.8	Use of HUD-1 or HUD-1A settlement statements.
		3500.9	Reproduction of settlement statements.
		3500.10	One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping.
		3500.11	Mailing.
		3500.12	No fee.
		3500.13	Relation to State laws.
		3500.14	Prohibition against kickbacks and unearned fees.
		3500.14	Prohibition against kickbacks and unearned fees. (Duplication!)
		3500.15	Affiliated business arrangements.
		3500.15	Controlled business arrangements. (Duplication!)
		3500.16	Title companies.
		3500.17	Escrow accounts.
		3500.18	Validity of contracts and liens.
		3500.19	Enforcement. (3500.20=N/A)
		3500.21	Mortgage servicing transfers. Appendices “A”, “B”, “C”, and “E” follow 3500.21

Title 24--Housing and Urban Development CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PART 3800--INVESTIGATIONS IN CONSUMER REGULATORY PROGRAMS
		3800.10	Scope of rules.
		3800.20	Subpoenas in investigations.
		3800.30	Subpoena enforcement in district court.
		3800.40	Investigational proceedings.
		3800.50	Rights of witnesses in investigational proceedings.
		3800.60	Settlements.

 

 
[Code of Federal Regulations] 
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.1]
 
[Page 249]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.1 Designation.
 
 This part may be referred to as Regulation X.
 

 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.2]
 
[Page 249-253]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.2 Definitions.
 
 (a) 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.
 (b) Other terms. As used in this part:
 Application means the submission of a borrower's financial 
information in anticipation of a credit decision, whether written or 
computer-generated, relating to a federally related mortgage loan. If 
the submission does not state or identify a specific property, the 
submission is an application for a pre-qualification and not an 
application for a federally related mortgage loan under this part. The 
subsequent addition of an identified property to the submission converts 
the submission to
 
[[Page 250]]
 
an application for a federally related mortgage loan.
 Business day means a day on which the offices of the business entity 
are open to the public for carrying on substantially all of the entity's 
business functions.
 Dealer means, in the case of property improvement loans, a seller, 
contractor, or supplier of goods or services. In the case of 
manufactured home loans, ``dealer'' means one who engages in the 
business of manufactured home retail sales.
 Dealer loan or dealer consumer credit contract means, generally, any 
arrangement in which a dealer assists the borrower in obtaining a 
federally related mortgage loan from the funding lender and then assigns 
the dealer's legal interests to the funding lender and receives the net 
proceeds of the loan. The funding lender is the lender for the purposes 
of the disclosure requirements of this part. If a dealer is a 
``creditor'' as defined under the definition of ``federally related 
mortgage loan'' in this part, the dealer is the lender for purposes of 
this part.
 Effective date of transfer is defined in section 6(i)(1) of RESPA 
(12 U.S.C. 2605(i)(1)). In the case of a home equity conversion mortgage 
or reverse mortgage as referenced in this section, the effective date of 
transfer is the transfer date agreed upon by the transferee servicer and 
the transferor servicer.
 Federally related mortgage loan or mortgage loan means as follows:
 (1) Any loan (other than temporary financing, such as a construction 
loan):
 (i) That is secured by a first or subordinate lien on residential 
real property, including a refinancing of any secured loan on 
residential real property upon which there is either:
 (A) Located or, following settlement, will be constructed using 
proceeds of the loan, a structure or structures designed principally for 
occupancy of from one to four families (including individual units of 
condominiums and cooperatives and including any related interests, such 
as a share in the cooperative or right to occupancy of the unit); or
 (B) Located or, following settlement, will be placed using proceeds 
of the loan, a manufactured home; and
 (ii) For which one of the following paragraphs applies. The loan:
 (A) Is made in whole or in part by any lender that is either 
regulated by or whose deposits or accounts are insured by any agency of 
the Federal Government;
 (B) Is made in whole or in part, or is insured, guaranteed, 
supplemented, or assisted in any way:
 (1) By the Secretary or any other officer or agency of the Federal 
Government; or
 (2) Under or in connection with a housing or urban development 
program administered by the Secretary or a housing or related program 
administered by any other officer or agency of the Federal Government;
 (C) Is intended to be sold by the originating lender to the Federal 
National Mortgage Association, the Government National Mortgage 
Association, the Federal Home Loan Mortgage Corporation (or its 
successors), or a financial institution from which the loan is to be 
purchased by the Federal Home Loan Mortgage Corporation (or its 
successors);
 (D) Is made in whole or in part by a ``creditor'', as defined in 
section 103(f) of the Consumer Credit Protection Act (15 U.S.C. 
1602(f)), that makes or invests in residential real estate loans 
aggregating more than $1,000,000 per year. For purposes of this 
definition, the term ``creditor'' does not include any agency or 
instrumentality of any State, and the term ``residential real estate 
loan'' means any loan secured by residential real property, including 
single-family and multifamily residential property;
 (E) Is originated either by a dealer or, if the obligation is to be 
assigned to any maker of mortgage loans specified in paragraphs (1)(ii) 
(A) through (D) of this definition, by a mortgage broker; or
 (F) Is the subject of a home equity conversion mortgage, also 
frequently called a ``reverse mortgage,'' issued by any maker of 
mortgage loans specified in paragraphs (1)(ii) (A) through (D) of this 
definition.
 (2) Any installment sales contract, land contract, or contract for 
deed on otherwise qualifying residential property is a federally related 
mortgage
 
[[Page 251]]
 
loan if the contract is funded in whole or in part by proceeds of a loan 
made by any maker of mortgage loans specified in paragraphs (1)(ii) (A) 
through (D) of this definition.
 (3) If the residential real property securing a mortgage loan is not 
located in a State, the loan is not a federally related mortgage loan.
 Good faith estimate means an estimate, prepared in accordance with 
section 5 of RESPA (12 U.S.C. 2604), of charges that a borrower is 
likely to incur in connection with a settlement.
 HUD-1 or HUD-1A settlement statement (also HUD-1 or HUD-1A) means 
the statement that is prescribed by the Secretary in this part for 
setting forth settlement charges in connection with either the purchase 
or the refinancing (or other subordinate lien transaction) of 1- to 4-
family residential property.
 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 Sec. 3500.5(b)(7), secondary market transactions.
 Managerial employee means an employee of a settlement service 
provider who does not routinely deal directly with consumers, and who 
either hires, directs, assigns, promotes, or rewards other employees or 
independent contractors, or is in a position to formulate, determine, or 
influence the policies of the employer. Neither the term ``managerial 
employee'' nor the term ``employee'' includes independent contractors, 
but a managerial employee may hold a real estate brokerage or agency 
license.
 Manufactured home is defined in Sec. 3280.2 of this title.
 Mortgage broker means a person (not an employee or exclusive agent 
of a lender) who brings a borrower and lender together to obtain a 
federally related mortgage loan, and who renders services as described 
in the definition of ``settlement services'' in this section. A loan 
correspondent approved under Sec. 202.8 of this title for Federal 
Housing Administration programs is a mortgage broker for purposes of 
this part.
 Mortgaged property means the real property that is security for the 
federally related mortgage loan.
 Person is defined in section 3(5) of RESPA (12 U.S.C. 2602(5)).
 Public Guidance Documents means documents that HUD has published in 
the Federal Register, and that it may amend from time-to-time by 
publication in the Federal Register. These documents are also available 
from HUD at the address indicated in 24 CFR 3500.3.
 Refinancing means a transaction in which an existing obligation that 
was subject to a secured lien on residential real property is satisfied 
and replaced by a new obligation undertaken by the same borrower and 
with the same or a new lender. The following shall not be treated as a 
refinancing, even when the existing obligation is satisfied and replaced 
by a new obligation with the same lender (this definition of 
``refinancing'' as to transactions with the same lender is similar to 
Regulation Z, 12 CFR 226.20(a)):
 (1) A renewal of a single payment obligation with no change in the 
original terms;
 (2) A reduction in the annual percentage rate as computed under the 
Truth in Lending Act with a corresponding change in the payment 
schedule;
 (3) An agreement involving a court proceeding;
 (4) A workout agreement, in which a change in the payment schedule 
or change in collateral requirements is agreed to as a result of the 
consumer's default or delinquency, unless the rate is increased or the 
new amount financed exceeds the unpaid balance plus earned finance 
charges and premiums for continuation of allowable insurance; and
 (5) The renewal of optional insurance purchased by the consumer that 
is added to an existing transaction, if disclosures relating to the 
initial purchase were provided.
 
[[Page 252]]
 
 Regulation Z means the regulations issued by the Board of Governors 
of the Federal Reserve System (12 CFR part 226) to implement the Federal 
Truth in Lending Act (15 U.S.C. 1601 et seq.), and includes the 
Commentary on Regulation Z.
 Required use means a situation in which a person must use a 
particular provider of a settlement service in order to have access to 
some distinct service or property, and the person will pay for the 
settlement service of the particular provider or will pay a charge 
attributable, in whole or in part, to the settlement service. However, 
the offering of a package (or combination of settlement services) or the 
offering of discounts or rebates to consumers for the purchase of 
multiple settlement services does not constitute a required use. Any 
package or discount must be optional to the purchaser. The discount must 
be a true discount below the prices that are otherwise generally 
available, and must not be made up by higher costs elsewhere in the 
settlement process.
 RESPA means the Real Estate Settlement Procedures Act of 1974, 12 
U.S.C. 2601 et seq.
 Servicer means the person responsible for the servicing of a 
mortgage loan (including the person who makes or holds a mortgage loan 
if such person also services the mortgage loan). The term does not 
include:
 (1) The Federal Deposit Insurance Corporation (FDIC) or the 
Resolution Trust Corporation (RTC), in connection with assets acquired, 
assigned, sold, or transferred pursuant to section 13(c) of the Federal 
Deposit Insurance Act or as receiver or conservator of an insured 
depository institution; and
 (2) The Federal National Mortgage Corporation (FNMA); the Federal 
Home Loan Mortgage Corporation (Freddie Mac); the RTC; the FDIC; HUD, 
including the Government National Mortgage Association (GNMA) and the 
Federal Housing Administration (FHA) (including cases in which a 
mortgage insured under the National Housing Act (12 U.S.C. 1701 et seq.) 
is assigned to HUD); the National Credit Union Administration (NCUA); 
the Farmers Home Administration or its successor agency under Public Law 
103-354 (FmHA); and the Department of Veterans Affairs (VA), in any case 
in which the assignment, sale, or transfer of the servicing of the 
mortgage loan is preceded by termination of the contract for servicing 
the loan for cause, commencement of proceedings for bankruptcy of the 
servicer, or commencement of proceedings by the FDIC or RTC for 
conservatorship or receivership of the servicer (or an entity by which 
the servicer is owned or controlled).
 Servicing means receiving any scheduled periodic payments from a 
borrower pursuant to the terms of any mortgage loan, including amounts 
for escrow accounts under section 10 of RESPA (12 U.S.C. 2609), and 
making the payments to the owner of the loan or other third parties of 
principal and interest and such other payments with respect to the 
amounts received from the borrower as may be required pursuant to the 
terms of the mortgage servicing loan documents or servicing contract. In 
the case of a home equity conversion mortgage or reverse mortgage as 
referenced in this section, servicing includes making payments to the 
borrower.
 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.
 Settlement service means any service provided in connection with a 
prospective or actual settlement, including, but not limited to, any one 
or more of the following:
 (1) Origination of a federally related mortgage loan (including, but 
not limited to, the taking of loan applications, loan processing, and 
the underwriting and funding of such loans);
 (2) Rendering of services by a mortgage broker (including 
counseling, taking of applications, obtaining verifications and 
appraisals, and other loan processing and origination services, and 
communicating with the borrower and lender);
 (3) Provision of any services related to the origination, processing 
or funding of a federally related mortgage loan;
 
[[Page 253]]
 
 (4) Provision of title services, including title searches, title 
examinations, abstract preparation, insurability determinations, and the 
issuance of title commitments and title insurance policies;
 (5) Rendering of services by an attorney;
 (6) Preparation of documents, including notarization, delivery, and 
recordation;
 (7) Rendering of credit reports and appraisals;
 (8) Rendering of inspections, including inspections required by 
applicable law or any inspections required by the sales contract or 
mortgage documents prior to transfer of title;
 (9) Conducting of settlement by a settlement agent and any related 
services;
 (10) Provision of services involving mortgage insurance;
 (11) Provision of services involving hazard, flood, or other 
casualty insurance or homeowner's warranties;
 (12) Provision of services involving mortgage life, disability, or 
similar insurance designed to pay a mortgage loan upon disability or 
death of a borrower, but only if such insurance is required by the 
lender as a condition of the loan;
 (13) Provision of services involving real property taxes or any 
other assessments or charges on the real property;
 (14) Rendering of services by a real estate agent or real estate 
broker; and
 (15) Provision of any other services for which a settlement service 
provider requires a borrower or seller to pay.
 Special information booklet means the booklet prepared by the 
Secretary pursuant to section 5 of RESPA (12 U.S.C. 2604) to help 
persons understand the nature and costs of settlement services. The 
Secretary publishes the form of the special information booklet in the 
Federal Register. The Secretary may issue or approve additional booklets 
or alternative booklets by publication of a Notice in the Federal 
Register.
 State means any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, and any territory or 
possession of the United States.
 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 Sec. 3500.5(b)(7)).
 Title company means any institution, or its duly authorized agent, 
that is qualified to issue title insurance.
 
[61 FR 13233, Mar. 26, 1996, as amended at 61 FR 29252, June 7, 1996; 61 
FR 58475, Nov. 15, 1996; 62 FR 20088, Apr. 24, 1997]
 
 Effective Date Note: At 61 FR 29252, June 7, 1996, Sec. 3500.2(b) 
was amended by adding a definition of ``managerial employee'', effective 
Oct. 7, 1996. At 61 FR 51782, Oct. 4, 1996, the effective date was 
delayed until further notice.
 

 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.3]
 
[Page 253]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.3 Questions or suggestions from public and copies of public guidance documents.
 
 Any questions or suggestions from the public regarding RESPA, or 
requests for copies of HUD Public Guidance Documents, should be directed 
to the Director, Office of Consumer and Regulatory Affairs, Department 
of Housing and Urban Development, 451 Seventh Street SW., Washington, DC 
20410-8000, rather than to HUD field offices. Legal questions may be 
directed to the Assistant General Counsel, GSE/RESPA Division, at this 
address.
 

 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.4]
 
[Page 253-254]
 
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.4 Reliance upon rule, regulation or interpretation by HUD.
 
 (a) Rule, regulation or interpretation. (1) For purposes of sections 
19 (a) and (b) of RESPA (12 U.S.C. 2617 (a) and (b)) only the following 
constitute a rule, regulation or interpretation of the Secretary:
 (i) All provisions, including appendices, of this part. Any other 
document referred to in this part is not incorporated in this part 
unless it is specifically set out in this part;
 (ii) Any other document that is published in the Federal Register by 
the Secretary and states that it is an ``interpretation,'' 
``interpretive rule,'' ``commentary,'' or a ``statement of policy'' for 
purposes of section 19(a) of RESPA. Such documents will be prepared by 
HUD staff and counsel. Such documents may be revoked or amended by a 
subsequent document published in the Federal Register by the Secretary.
 
[[Page 254]]
 
 (2) A ``rule, regulation, or interpretation thereof by the 
Secretary'' for purposes of section 19(b) of RESPA (12 U.S.C. 2617(b)) 
shall not include the special information booklet prescribed by the 
Secretary or any other statement or issuance, whether oral or written, 
by an officer or representative of the Department of Housing and Urban 
Development (HUD), letter or memorandum by the Secretary, General 
Counsel, any Assistant Secretary or other officer or employee of HUD, 
preamble to a regulation or other issuance of HUD, Public Guidance 
Document, report to Congress, pleading, affidavit or other document in 
litigation, pamphlet, handbook, guide, telegraphic communication, 
explanation, instructions to forms, speech or other material of any 
nature which is not specifically included in paragraph (a)(1) of this 
section.
 (b) Unofficial interpretations; staff discretion. In response to 
requests for interpretation of matters not adequately covered by this 
part or by an official interpretation issued under paragraph (a)(1)(ii) 
of this section, unofficial staff interpretations may be provided at the 
discretion of HUD staff or counsel. Written requests for such 
interpretations should be directed to the address indicated in 
Sec. 3500.3. Such interpretations provide no protection under section 
19(b) of RESPA (12 U.S.C. 2617(b)). Ordinarily, staff or counsel will 
not issue unofficial interpretations on matters adequately covered by 
this part or by official interpretations or commentaries issued under 
paragraph (a)(1)(ii) of this section.
 (c) All informal counsel's opinions and staff interpretations issued 
before November 2, 1992, were withdrawn as of that date. Courts and 
administrative agencies, however, may use previous opinions to determine 
the validity of conduct under the previous Regulation X.
 

 
Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.5]
 
[Page 254-255]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.5 Coverage of RESPA.
 
 (a) Applicability. RESPA and this part apply to all federally 
related mortgage loans, except for the exemptions provided in paragraph 
(b) of this section.
 (b) Exemptions. (1) A loan on property of 25 acres or more.
 (2) Business purpose loans. An extension of credit primarily for a 
business, commercial, or agricultural purpose, as defined by Regulation 
Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining 
whether the exemption applies.
 (3) 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.
 (4) 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.
 (5) 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.
 (6) 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
 
[[Page 255]]
 
is not required, even if the lender charges an additional fee for the 
conversion.
 (7) Secondary market transactions. A bona fide transfer of a loan 
obligation in the secondary market is not covered by RESPA and this 
part, except as set forth in section 6 of RESPA (12 U.S.C. 2605) and 
Sec. 3500.21. In determining what constitutes a bona fide transfer, HUD 
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 
Sec. 3500.2.)
 
[61 FR 13233, Mar. 26, 1996, as amended at 61 FR 58475, Nov. 15, 1996]
 

 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.6]
 
[Page 255-256]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.6 Special information booklet at time of loan application.
 
 (a) Lender to provide special information booklet. Subject to the 
exceptions set forth in this paragraph, the lender shall provide a copy 
of the special information booklet to a person from whom the lender 
receives, or for whom the lender prepares, a written application for a 
federally related mortgage loan. When two or more persons apply together 
for a loan, the lender is in compliance if the lender provides a copy of 
the booklet to one of the persons applying.
 (1) The lender shall provide the special information booklet by 
delivering it or placing it in the mail to the applicant not later than 
three business days (as that term is defined in Sec. 3500.2) after the 
application is received or prepared. However, if the lender denies the 
borrower's application for credit before the end of the three-business-
day period, then the lender need not provide the booklet to the 
borrower. If a borrower uses a mortgage broker, the mortgage broker 
shall distribute the special information booklet and the lender need not 
do so. The intent of this provision is that the applicant receive the 
special information booklet at the earliest possible date.
 (2) In the case of a federally related mortgage loan involving an 
open-ended credit plan, as defined in Sec. 226.2(a)(20) of Regulation Z 
(12 CFR), a lender or mortgage broker that provides the borrower with a 
copy of the brochure entitled ``When Your Home is On the Line: What You 
Should Know About Home Equity Lines of Credit'', or any successor 
brochure issued by the Board of Governors of the Federal Reserve System, 
is deemed to be in compliance with this section.
 (3) In the categories of transactions set forth at the end of this 
paragraph, the lender or mortgage broker does not have to provide the 
booklet to the borrower. Under the authority of section 19(a) of RESPA 
(12 U.S.C. 2617(a)), the Secretary may issue a revised or separate 
special information booklet that deals with these transactions, or the 
Secretary may chose to endorse the forms or booklets of other Federal 
agencies. In such an event, the requirements for delivery by lenders and 
the availability of the booklet or alternate materials for these 
transactions will be set forth in a Notice in the Federal Register. This 
paragraph shall apply to the following transactions:
 (i) Refinancing transactions;
 (ii) Closed-end loans, as defined in 12 CFR 226.2(a)(10) of 
Regulation Z, when the lender takes a subordinate lien;
 (iii) Reverse mortgages; and
 (iv) Any other federally related mortgage loan whose purpose is not 
the purchase of a 1- to 4-family residential property.
 (b) Revision. The Secretary may from time to time revise the special 
information booklet by publishing a notice in the Federal Register.
 (c) Reproduction. The special information booklet may be reproduced 
in any form, provided that no change is made other than as provided 
under paragraph (d) of this section. The special information booklet may 
not be made a part of a larger document for purposes of distribution 
under RESPA and this section. Any color, size and quality of paper, type 
of print, and method of reproduction may be used so long as the booklet 
is clearly legible.
 (d) Permissible changes. (1) No changes to, deletions from, or 
additions to the special information booklet currently prescribed by the 
Secretary shall be made other than those specified in this paragraph (d) 
or any others approved in
 
[[Page 256]]
 
writing by the Secretary. A request to the Secretary for approval of any 
changes shall be submitted in writing to the address indicated in 
Sec. 3500.3, stating the reasons why the applicant believes such 
changes, deletions or additions are necessary.
 (2) The cover of the booklet may be in any form and may contain any 
drawings, pictures or artwork, provided that the words ``settlement 
costs'' are used in the title. Names, addresses and telephone numbers of 
the lender or others and similar information may appear on the cover, 
but no discussion of the matters covered in the booklet shall appear on 
the cover.
 (3) The special information booklet may be translated into languages 
other than English.
 

 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.7]
 
[Page 256-257]
 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.7 Good faith estimate.
 
 (a) Lender to provide. Except as provided in this paragraph (a) or 
paragraph (f) of this section, the lender shall provide all applicants 
for a federally related mortgage loan with a good faith estimate of the 
amount of or range of charges for the specific settlement services the 
borrower is likely to incur in connection with the settlement. The 
lender shall provide the good faith estimate required under this section 
(a suggested format is set forth in appendix C of this part) either by 
delivering the good faith estimate or by placing it in the mail to the 
loan applicant, not later than three business days after the application 
is received or prepared.
 (1) If the lender denies the application for a federally related 
mortgage loan before the end of the three-business-day period, the 
lender need not provide the denied borrower with a good faith estimate.
 (2) For ``no cost'' or ``no point'' loans, the charges to be shown 
on the good faith estimate include any payments to be made to affiliated 
or independent settlement service providers. These payments should be 
shown as P.O.C. (Paid Outside of Closing) on the Good Faith Estimate and 
the HUD-1 or HUD-1A.
 (3) In the case of dealer loans, the lender is responsible for 
provision of the good faith estimate, either directly or by the dealer.
 (4) If a mortgage broker is the exclusive agent of the lender, 
either the lender or the mortgage broker shall provide the good faith 
estimate within three business days after the mortgage broker receives 
or prepares the application.
 (b) Mortgage broker to provide. In the event an application is 
received by a mortgage broker who is not an exclusive agent of the 
lender, the mortgage broker must provide a good faith estimate within 
three days of receiving a loan application based on his or her knowledge 
of the range of costs (a suggested format is set forth in appendix C of 
this part). As long as the mortgage broker has provided the good faith 
estimate, the funding lender is not required to provide an additional 
good faith estimate, but the funding lender is responsible for 
ascertaining that the good faith estimate has been delivered. If the 
application for mortgage credit is denied before the end of the three-
business-day period, the mortgage broker need not provide the denied 
borrower with a good faith estimate.
 (c) Content of good faith estimate. A good faith estimate consists 
of an estimate, as a dollar amount or range, of each charge which:
 (1) Will be listed in section L of the HUD-1 or HUD-1A in accordance 
with the instructions set forth in appendix A to this part; and
 (2) That the borrower will normally pay or incur at or before 
settlement based upon common practice in the locality of the mortgaged 
property. Each such estimate must be made in good faith and bear a 
reasonable relationship to the charge a borrower is likely to be 
required to pay at settlement, and must be based upon experience in the 
locality of the mortgaged property. As to each charge with respect to 
which the lender requires a particular settlement service provider to be 
used, the lender shall make its estimate based upon the lender's 
knowledge of the amounts charged by such provider.
 (d) Form of good faith estimate. A suggested good faith estimate 
form is set forth in appendix C to this part and is in compliance with 
the requirements of the Act except for any additional requirements of 
paragraph (e) of this section. The good faith estimate may be
 
[[Page 257]]
 
provided together with disclosures required by the Truth in Lending Act, 
15 U.S.C. 1601 et seq., so long as all required material for the good 
faith estimate is grouped together. The lender may include additional 
relevant information, such as the name/signature of the applicant and 
loan officer, date, and information identifying the loan application and 
property, as long as the form remains clear and concise and the 
additional information is not more prominent than the required material.
 (e) Particular providers required by lender. (1) If the lender 
requires the use (see Sec. 3500.2, ``required use'') of a particular 
provider of a settlement service, other than the lender's own employees, 
and also requires the borrower to pay any portion of the cost of such 
service, then the good faith estimate must:
 (i) Clearly state that use of the particular provider is required 
and that the estimate is based on the charges of the designated 
provider;
 (ii) Give the name, address, and telephone number of each provider; 
and
 (iii) Describe the nature of any relationship between each such 
provider and the lender. Plain English references to the relationship 
should be utilized, e.g., ``X is a depositor of the lender,'' ``X is a 
borrower from the lender,'' ``X has performed 60% of the lender's 
settlements in the past year.'' (The lender is not required to keep 
detailed records of the percentages of use. Similar language, such as 
``X was used [regularly] [frequently] in our settlements the past year'' 
is also sufficient for the purposes of this paragraph.) In the event 
that more than one relationship exists, each should be disclosed.
 (2) For purposes of paragraph (e)(1) of this section, a 
``relationship'' exists if:
 (i) The provider is an associate of the lender, as that term is 
defined in 12 U.S.C. 2602(8);
 (ii) Within the last 12 months, the provider has maintained an 
account with the lender or had an outstanding loan or credit arrangement 
with the lender; or
 (iii) The lender has repeatedly used or required borrowers to use 
the services of the provider within the last 12 months.
 (3) Except for a provider that is the lender's chosen attorney, 
credit reporting agency, or appraiser, if the lender is in an affiliated 
business relationship (see Sec. 3500.15) with a provider, the lender may 
not require the use of that provider.
 (4) If the lender maintains a controlled list of required providers 
(five or more for each discrete service) or relies on a list maintained 
by others, and at the time of application the lender has not yet decided 
which provider will be selected from that list, then the lender may 
satisfy the requirements of this section if the lender:
 (i) Provides the borrower with a written statement that the lender 
will require a particular provider from a lender-controlled or -approved 
list; and
 (ii) Provides the borrower in the Good Faith Estimate the range of 
costs for the required provider(s), and provides the name of the 
specific provider and the actual cost on the HUD-1 or HUD-1A.
 (f) Open-end lines of credit (home-equity plans) under Truth in 
Lending Act. In the case of a federally related mortgage loan involving 
an open-end line of credit (home-equity plan) covered under the Truth in 
Lending Act and Regulation Z, a lender or mortgage broker that provides 
the borrower with the disclosures required by 12 CFR 226.5b of 
Regulation Z at the time the borrower applies for such loan shall be 
deemed to satisfy the requirements of this section.
 
(Approved by the Office of Management and Budget under control number 
2502-0265)
 
[61 FR 13233, Mar. 26, 1996, as amended at 61 FR 58476, Nov. 15, 1996]
 
 
[Code of Federal Regulations]
[Title 24, Volume 5, Part 1700 to end]
[Revised as of April 1, 1999]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR3500.8]
 
[Page 257-258]
 

 
TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER XX--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
 COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT--Table of Contents
 
Sec. 3500.8 Use of HUD-1 or HUD-1A settlement statements.
 
 (a) Use by settlement agent. The settlement agent shall use the HUD-
1 settlement statement in every settlement involving a federally related 
mortgage loan in which there is a borrower and a seller. For 
transactions in which there is a borrower and no seller, such as 
refinancing loans or subordinate lien loans, the HUD-1 may be utilized 
by using the borrower's side of the HUD-1 statement. Alternatively, the 
form HUD-1A may be used for these transactions. Either the HUD-1 or the 
HUD-
 
[[Page 258]]
 
1A, as appropriate, shall be used for every RESPA-covered transaction, 
unless its use is specifically exempted, but the HUD-1 or HUD-1A may be 
modified as permitted under this part. The use of the HUD-1 or HUD-1A is 
exempted for open-end lines of credit (home-equity plans) covered by the 
Truth in Lending Act and Regulation Z.
 (b) Charges to be stated. The settlement agent shall complete the 
HUD-1 or HUD-1A in accordance with the instructions set forth in 
appendix A to this part.
 (c) Aggregate accounting at settlement. (1) After itemizing 
individual deposits in the 1000 series using single-item accounting, the 
servicer shall make an adjustment based on aggregate accounting. This 
adjustment equals the difference in the deposit required under aggregate 
accounting and the sum of the deposits required under single-item 
accounting. The computation steps for both accounting methods are set 
out in Sec. 3500.17(d). The adjustment will always be a negative number 
or zero (-0-). The settlement agent shall enter the aggregate adjustment 
amount on a final line in the 1000 series of the HUD-1 or HUD-1A 
statement.
 (2) During the phase-in period, as defined in Sec. 3500.17(b), an 
alternative procedure is available. The settlement agent may initially 
calculate the 1000 series deposits for the HUD-1 and HUD-1A settlement 
statement using single-item analysis with only a one-month cushion 
(unless the mortgage loan documents indicate a smaller amount). In the 
escrow account analysis conducted within 45 days of settlement, however, 
the servicer shall adjust the escrow account to reflect the aggregate 
accounting balance. Appendix E to thi