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					Real Estate Settlement Procedures Act (RESPA)



Background                                                        included a standard Good Faith Estimate form and
                                                                  a revised HUD-1 Settlement Statement that was
The Real Estate Settlement Procedures Act of 1974                 required as of January 1, 2010. Technical changes,
(RESPA) (12 USC 2601 et seq.) (the ‘‘Act’’) became                including streamlined mortgage servicing disclo-
effective on June 20, 1975. The Act requires                      sure language, elimination of outdated escrow
lenders, mortgage brokers, or servicers of home                   account provisions, and a provision permitting an
loans to provide borrowers with pertinent and                     ‘‘average charge’’ to be listed on the Good Faith
timely disclosures regarding the nature and costs                 Estimate and HUD-1 Settlement Statement, took
of the real estate settlement process. The Act also               effect on January 16, 2009. In addition, HUD
protects borrowers against certain abusive prac-                  clarified that all disclosures required by RESPA are
tices, such as kickbacks, and places limitations                  permitted to be provided electronically, in accor-
upon the use of escrow accounts. The Department                   dance with the Electronic Signatures in Global and
of Housing and Urban Development (HUD) promul-                    National Commerce Act (ESIGN).
gated Regulation X (24 CFR 3500), which imple-
ments RESPA. The National Affordable Housing
Act of 1990 amended RESPA to require detailed                     Coverage (§3500.5(a))
disclosures concerning the transfer, sale, or assign-
ment of mortgage servicing. It also requires                      Federally Related Mortgage Loans
disclosures for mortgage escrow accounts at                       RESPA is applicable to all federally related mort-
closing and annually thereafter, itemizing the                    gage loans, which are defined as:
charges to be paid by the borrower and what is
paid out of the account by the servicer.                          Loans (other than temporary loans), including
                                                                  refinancings secured by a first or subordinate lien
   In October 1992, Congress amended RESPA to                     on residential real property upon which either:
cover subordinate lien loans. HUD, however,
decided not to enforce these provisions until                     • A 1-4 family structure is located or is to be
Regulation X was amended to cover these loans.                      constructed using proceeds of the loan (includ-
On February 10, 1994, Regulation X was amended                      ing individual units of condominiums and coop-
to extend coverage to subordinate lien loans. The                   eratives) or
amendments were effective August 9, 1994.                         • A manufactured home is located or is to be
Exemptions from coverage of RESPA and Regula-                       constructed using proceeds of the loan.
tion X, set forth in section 3500.5(b), were effective
March 14, 1994. Technical corrections and amend-                    In addition, the federally related mortgage loan
ments to the rule were issued on March 30, 1994                     must meet one of the following conditions:
and July 22, 1994.
                                                                    – Made by a lender,2 creditor,3 dealer;4
   On June 7, 1996, HUD amended Regulation X to
                                                                    – Made or insured by an agency of the federal
clarify certain exemption provisions of RESPA, to
                                                                      government;
amend the controlled business disclosure require-
ments, and to address specific comments raised in                   – Made in connection with a housing or urban
the 1994 rule. These amendments became effec-                         development program administered by an
tive on October 7, 1996. When it enacted the                          agency of the federal government;
Economic Growth and Regulatory Paperwork Re-                        – Made and intended to be sold by the originat-
duction Act of 1996,1 Congress further amended                        ing lender or creditor to FNMA; GNMA, or
RESPA to clarify certain definitions including ‘‘con-                 FHLMC (or its successor);5
trolled business arrangement,’’ which was changed
to ‘‘affiliated business arrangement.’’ The changes                  2. A lender includes financial institutions either regulated by, or
also reduced the disclosures under the mortgage                   whose deposits or accounts are insured by, any agency of the
servicing provisions of RESPA.                                    federal government.
                                                                     3. A creditor is defined in section 103(f) of the Consumer Credit
  In 2008, HUD issued a RESPA Reform Rule                         Protection Act (15 USC 1602(f)). RESPA covers any creditor that
                                                                  makes or invests in residential real estate loans aggregating more
(73 FR 68204, Nov. 17, 2008) that included                        than $1,000,000 per year.
substantive and technical changes to the existing                    4. Dealer is defined in Regulation X to mean a seller,
RESPA regulations and different implementation                    contractor, or supplier of goods or services. Dealer loans are
                                                                  covered by RESPA if the obligations are to be assigned before the
dates for various provisions. Substantive changes                 first payment is due to any lender or creditor otherwise subject to
                                                                  the regulation.
                                                                     5. FNMA - Federal National Mortgage Association; GNMA -
 1. Pub.L. 104-208, Div. A., Title II 2103 (c), Sept. 30, 1996.   Government National Mortgage Association; FHLMC - Federal



Consumer Compliance Handbook                                                                                         RESPA • 1 (6/10)
Real Estate Settlement Procedures Act


  – Subject of a home equity conversion mortgage         Special Information Booklet (§3500.6)
    or reverse mortgage issued by a lender or
    creditor subject to the regulation; or               A loan originator6 is required to provide the
                                                         borrower with a copy of the Special Information
  – Made by a lender, dealer, or creditor subject to
                                                         Booklet at the time a written application is submit-
    the regulation and used in whole or in part to
                                                         ted, or no later than three-business days after the
    fund installment sales contracts, land con-
                                                         application is received. If the application is denied
    tracts, or contracts for deeds on otherwise
                                                         before the end of the three business-day period,
    qualifying residential property.
                                                         the loan originator is not required to provide the
                                                         booklet. If the borrower uses a mortgage broker,
Exemptions (§3500.5(b))                                  the broker rather than the lender, must provide the
                                                         booklet.
The following transactions are exempt from cover-
                                                            The booklet does not need to be provided for
age:
                                                         refinancing transactions, closed-end subordinate
• A loan on property of 25 acres or more (whether        lien mortgage loans and reverse mortgage trans-
  or not a dwelling is located on the property).         actions, or for any other federally related mortgage
• A loan primarily for business, commercial or           loan not intended for the purchase of a one-to-four
  agricultural purposes (definition identical to Regu-   family residential property.
  lation Z, 12 CFR 226.3(a)(1)).                           A loan originator that complies with Regulation Z
• A temporary loan, such as a construction loan.         (12 CFR 226.5b) for open-end home equity plans is
  The exemption does not apply if the loan is used       deemed to have complied with this section.
  as, or may be converted to, permanent financing
  by the same financial institution or is used to        Good Faith Estimate (GFE) of
  finance transfer of title to the first user of the
  property. If the lender issues a commitment for        Settlement Costs (§3500.7)
  permanent financing, it is covered by the regula-
                                                         Standard GFE Required
  tion. Any construction loan with a term of two
  years or more is covered by the regulation,            As of January 1, 2010, a loan originator was
  unless it is made to a bona fide contractor.           required to provide a consumer with the standard
  ‘‘Bridge’’ or ‘‘swing’’ loans are not covered by the   GFE form that is designed to allow borrowers to
  regulation.                                            shop for a mortgage loan by comparing settlement
• A loan secured by vacant or unimproved prop-           costs and loan terms. Appendix C to Regulation X
  erty where no proceeds of the loan will be used to     contains the GFE form and the instructions for
  construct a 1-4 family residential structure. If the   completing it. The GFE form is also available at
  proceeds will be used to locate a manufactured         www.hud.gov/offices/adm/hudclips/forms/files/
  home or construct a structure within two years         1-gfe.pdf.
  from the date of settlement, the loan is covered.
• An assumption, unless the mortgage instruments         Overview of the Standard GFE
  require lender approval for the assumption and         The first page of the GFE includes a summary of
  the lender approves the assumption.                    loan terms and a summary of estimated settlement
• A renewal or modification where the original           charges. It also includes information about key
  obligation (note) is still in effect but modified.     dates such as when the interest rate for the loan
                                                         quoted in the GFE expires and when the estimate
• A bona fide transfer of a loan obligation in the
                                                         for the settlement charges expires. The second
  secondary market. (However, the mortgage ser-
                                                         page discloses settlement charges as subtotals for
  vicing transfer disclosure requirements of 24 CFR
                                                         eleven categories of costs. The third page provides
  3500.21 still apply.) Mortgage broker transac-
                                                         a table explaining which charges can change at
  tions that are table funded (the loan is funded by
                                                         settlement, a trade-off table showing the relation-
  a contemporaneous advance of loan funds and
                                                         ship between the interest rate and settlement
  an assignment of the loan to the person advanc-
                                                         charges, and a shopping chart to compare the
  ing the funds) are not secondary market transac-
  tions and, therefore, are covered by RESPA.
                                                             6. The RESPA Reform Rule added the definition of ‘‘loan
                                                         originator’’ to the list of defined terms in the RESPA regulations. A
Home Loan Mortgage Corporation.                          ‘‘loan originator’’ is defined as a lender or mortgage broker.




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                                                                      Real Estate Settlement Procedures Act



costs and terms of loans offered by different               three business days after a mortgage broker
originators.                                                receives either an application or information
                                                            sufficient to complete an application. The lender
                                                            is responsible for ascertaining whether the GFE
GFE Application Requirements                                has been provided. If the mortgage broker has
                                                            provided the GFE to the applicant, the lender is
• The loan originator must provide the standard
                                                            not required to provide an additional GFE.
  GFE to the borrower within three business days of
  receipt of an application for a mortgage loan. A        • A loan originator is prohibited from charging a
  loan originator is not required to provide a GFE if       borrower any fee in order to obtain a GFE, unless
  before the end of the three-business-day period,          the fee is limited to the cost of a credit report.
  the application is denied or the borrower with-
  draws the application.
                                                          GFE Not Required for Open End Lines
• An application can be in writing or electronically      of Credit (§3500.7(h))
  submitted, including a written record of an oral
  application.                                            A loan originator that complies with Regulation Z
                                                          (12 CFR 226.5b) for open-end home equity plans is
• A loan originator determines what information it
                                                          deemed to have complied with section 3500.7.
  needs to collect from a borrower and which of the
  collected information it will use in order to issue a
  GFE. Under the regulations, an ‘‘application’’          Availability of GFE Terms (§3500.7(c))
  includes at least the following six pieces of
  information:                                            Regulation X does not establish a minimum period
                                                          of availability for which the interest rate must be
  – the borrower’s name,
                                                          honored. The loan originator must determine the
  – the borrower’s gross monthly income,                  expiration date for the interest rate of the loan
  – the borrower’s Social Security number (e.g., to       stated on the GFE. In contrast, Regulation X
    enable the loan originator to obtain a credit         requires that the estimated settlement charges and
    report),                                              loan terms listed on the GFE be honored by the
                                                          loan originator for at least ten business days from
  – the property address,                                 the date the GFE is provided. The period of
  – an estimate of the value of the property, and         availability for the estimated settlement charges
                                                          and loan terms as well as the period of availability
  – the mortgage loan amount sought.
                                                          for the interest rate of the loan stated on the GFE
                                                          must be listed on the GFE in the ‘‘Important dates’’
  In addition, a loan originator may require the
                                                          section of the form.
  submission of any other information it deems
  necessary. A loan originator will be presumed to           After the expiration date for the interest rate of the
  have relied on such information prior to issuing a      loan stated on the GFE, the interest rate and the
  GFE and cannot base a revision of a GFE on that         other rate related charges, including the charge or
  information unless it changes or is later found to      credit for the interest rate chosen, the adjusted
  be inaccurate.                                          origination charges and the per diem interest can
                                                          change until the interest rate is locked.
• While the loan originator may require the bor-
  rower to submit additional information beyond the
  six pieces of information listed above in order to      Key GFE Form Contents (§3500.7(d))
  issue a GFE, it cannot require, as a condition of
  providing the GFE, the submission of supplemen-         The loan originator must ensure that the required
  tal documentation to verify the information pro-        GFE form is completed in accordance with the
  vided by the borrower on the application. How-          Instructions set forth in Appendix C of 24 CFR
  ever, a loan originator is not prohibited from using    3500.
  its own sources to verify the information provided
  by the borrower prior to issuing the GFE. The loan
                                                          First Page of GFE
  originator can require borrowers to provide
  verification information after the GFE has been         • The first page of the GFE discloses identifying
  issued in order to complete final underwriting.           information such as the name and address of the
                                                            ‘‘loan originator,’’ which includes the lender or the
• For dealer loans, the loan originator is respon-
                                                            mortgage broker originating the loan. The ‘‘pur-
  sible for providing the GFE directly or ensuring
                                                            pose’’ section indicates what the GFE is about
  that the dealer provides the GFE.
                                                            and directs the borrower to the Truth in Lending
• For mortgage brokered loans, either the lender or         disclosures and HUD’s website for more informa-
  the mortgage broker must provide a GFE within             tion. The borrower is informed that only the


Consumer Compliance Handbook                                                                        RESPA • 3 (6/10)
Real Estate Settlement Procedures Act


  borrower can shop for the best loan and that the         owed for principal, interest and any mortgage
  borrower should compare loan offers using the            insurance.
  shopping chart on the third page of the GFE.           • The bottom of the first page includes subtotals for
• The ‘‘Important dates’’ section requires the loan        the adjusted origination charges and charges for
  originator to state the expiration date for the          all other settlement charges listed on page two,
  interest rate for the loan provided in the GFE, as       along with the total estimated settlement charges.
  well as the expiration date for the estimate of
  other settlement charges and the loan terms not        Second Page of GFE
  dependent upon the interest rate.
                                                         The second page of the GFE requires disclosure of
• While the interest rate stated on the GFE is not       all settlement charges. It provides for the estimate
  required to be honored for any specific period of      of total settlement costs in eleven categories
  time, the estimate for the other settlement charges    (Blocks 1–11) discussed below. The adjusted
  and other loan terms must be honored for at least      origination charges are disclosed in ‘‘Block A’’ and
  ten business days from when the GFE is                 all other settlement charges are disclosed in ‘‘Block
  provided.                                              B.’’ The amounts in the blocks are to be added to
• In addition, the form must state how many              arrive at the ‘‘Total Estimated Settlement Charges,’’
  calendar days within which the borrower must go        which is required to be listed at the bottom of the
  to settlement once the interest rate is locked (rate   page.
  lock period). The form also requires disclosure of
  how many days prior to settlement the interest         Disclosure of Adjusted Origination Charge (Block
                                                         A)
  rate would have to be locked, if applicable.
• The ‘‘Summary of your loan’’ section requires          Block A addresses disclosure of origination
  disclosure of:                                         charges, which include all lender and mortgage
                                                         broker charges. The ‘‘Your Adjusted Origination
  – the loan amount,                                     Charge’’ results from the subtraction of a ‘‘credit’’
  – loan term,                                           from the ‘‘origination charge’’ or the addition of a
                                                         ‘‘charge’’ to the ‘‘origination charge.’’
  – initial interest rate,
                                                         • Block 1 - The origination charges, which include
  – initial monthly payment for principal, interest,       lender processing and underwriting fees and any
    and any mortgage insurance,                            fees paid to a mortgage broker;
  – whether the interest rate can rise, and if so, the
    maximum rate to which it can rise over the life        Note on Origination Charge: This block requires
    of the loan, and the period of time after which        the disclosure of all charges that all loan
    the interest rate can first change,                    originators involved in the transaction will receive
                                                           for originating the loan (excluding any charges
  – whether the loan balance can rise if the
                                                           for points). A loan originator may not separately
    payments are made on time and if so, the
                                                           charge any additional fees for getting the loan
    maximum amount to which it can rise over the
                                                           such as application, processing or underwriting
    life of the loan,
                                                           fees. The amount in Block 1 is subject to zero
  – whether the monthly amount owed for princi-            tolerance, i.e., the amount cannot change at
    pal, interest and any mortgage insurance can           settlement.
    rise even if payments are made on time, and if
                                                         • Block 2 - A ‘‘credit’’ or ‘‘charge’’ for the interest
    so, the maximum amount to which the monthly
                                                           rate chosen;
    amount owed can ever rise over the life of the
    loan,
                                                           Notes on Credit or Charge for the Interest Rate
  – whether the loan has a prepayment penalty,             Chosen:
    and if so, the maximum amount it could be,
    and                                                    Transaction Involving a Mortgage Broker: For a
  – whether the loan has a balloon payment, and if         transaction involving a mortgage broker,7 Block 2
    so, the amount of such payment and in how
    many years it will be due.                              7. The RESPA Reform Rule changed the definition of
                                                         ‘‘mortgage broker’’ to mean a person or entity (not an employee of
• The ‘‘Escrow account information’’ section             a lender) that renders origination services and serves as an
                                                         intermediary between a lender and a borrower in a transaction
  requires the loan originator to indicate whether       involving a federally related mortgage loan, including such person
  the loan does or does not have an escrow               or entity that closes the loan in its own name and table funds the
  account to pay property taxes or other property        transaction. The definition will also apply to a loan correspondent
                                                         approved under 24 CFR 202.8 for Federal Housing Administration
  related charges. In addition, this section also        (FHA programs). The definition would also include an ‘‘exclusive
  requires the disclosure of the monthly amount          agent’’ who is not an employee of the lender.


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                                                                      Real Estate Settlement Procedures Act



  requires disclosure of a ‘‘credit or charge’’           • Block 11 - Homeowner’s insurance charges.
  (points) for the specific interest rate chosen. The
  credit or charge for the specific interest rate
  chosen is the net payment to the mortgage
                                                          Third Page of GFE
  broker (i.e., the sum of all payments to the            The third page of the GFE includes the following
  mortgage broker from the lender, including              information:
  payments based on the loan amount, a flat rate or
                                                          • A tolerance chart identifying the charges that can
  any other compensation, and in a table funded
                                                            change at settlement (see discussion on toler-
  transaction, the loan amount less the price paid
                                                            ances below);
  for the loan by the lender).
     When the net payment to the mortgage broker          • A trade-off table which requires the loan origina-
  from the lender is positive, there is a ‘‘credit’’ to     tor to provide information on the loan described
  the borrower and it is entered as a negative              in the GFE and at the loan originator’s option,
  amount. For example, if the lender pays a yield           information about alternative loans (one with
  spread premium to a mortgage broker for the               lower settlement charges but a higher interest
  loan set forth in the GFE, the payment must be            rate and one with a lower interest rate but higher
  disclosed as a ‘‘credit’’ to the borrower for the         settlement charges);
  particular interest rate listed on the GFE (re-         • A shopping chart that allows the consumer to fill
  flected on the GFE at Block 2, checkbox 2). The           in loan terms and settlement charges from other
  term ‘‘yield spread premium’’ is not featured on          lenders or brokers to use to compare loans; and
  the GFE or the HUD-1 Settlement Statement.
     Points paid by the borrower for the interest rate    • Language indicating that some lenders may sell
  chosen must be disclosed as a ‘‘charge’’                  the loan after settlement but that any fees the
  (reflected on the GFE at Block 2, third checkbox).        lender receives in the future cannot change the
  A loan cannot include both a charge (points) and          borrower’s loan or the settlement charges.
  a credit (yield spread premium).
                                                          Tolerances on Settlement Costs
  Transaction Not Involving a Mortgage Broker: For
                                                          (§3500.7(e) and (i))
  a transaction without a mortgage broker, a lender
  may choose not to separately disclose any credit        The RESPA Reform Rule established ‘‘tolerances’’
  or charge for the interest rate chosen for the loan     or limits on the amount actual settlement charges
  in the GFE. If the lender does not include any          can vary at closing from the amounts stated on the
  credit or charge in Block 2, it must check the first    GFE. The rule established three categories of
  checkbox in Block 2 indicating that, ‘‘The credit       settlement charges and each category has differ-
  or charge for the interest rate you have chosen is      ent tolerances. If, at settlement, the charges
  included in ‘our origination charge’ above.’’ Only      exceed the charges listed on the GFE by more than
  one of the boxes in Block 2 may be checked, as          the permitted tolerances, the loan originator may
  a credit and charge cannot occur together in the        cure the tolerance violation by reimbursing to the
  same transaction.                                       borrower the amount by which the tolerance was
                                                          exceeded, at settlement or within 30 calendar days
Disclosure of Charges for All Other Settlement            after settlement.
Services (Block B)

Block B is the sum of charges for all settlement          Tolerance Categories
services other than the origination charges.              • Zero tolerance category. This category of fees is
• Block 3 - Required services by providers selected         subject to a zero tolerance standard. The fees
  by the lender such as appraisal and flood                 estimated on the GFE may not be exceeded at
  certification fees;                                       closing. These fees include:
• Block 4 - Title service fees and the cost of              – the loan originator’s own origination charge,
  lender’s title insurance;                                   including processing and underwriting fees;
• Block 5 - Owner’s title insurance;                        – the credit or charge for the interest rate chosen
                                                              (i.e., yield spread premium or discount points)
• Block 6 - Other required services for which the
                                                              while the interest rate is locked;
  consumer may shop;
                                                            – the adjusted origination charge while the
• Block 7 - Government recording charges;
                                                              interest rate is locked; and
• Block 8 - Transfer tax charges;
                                                            – state/local property transfer taxes.
• Block 9 - Initial deposit for escrow account;
                                                          • Ten percent tolerance category. For this category
• Block 10 - Daily interest charges; and                    of fees, while each individual fee may increase or


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  decrease, the sum of the charges at settlement         Changed Circumstances (§3500.2(b);
  may not be greater than 10 percent above the           §3500.7(f)(1) and (f)(2))
  sum of the amounts included on the GFE. This
  category includes fees for:                            Changed circumstances are defined as:

  – loan originator required settlement services,        • acts of God, war, disaster or other emergency;
    where the loan originator selects the third-party    • information particular to the borrower or transac-
    settlement service provider;                           tion that was relied on in providing the GFE that
  – loan originator required services, title services,     changes or is found to be inaccurate after the
    required title insurance and owner’s title insur-      GFE has been provided;
    ance when the borrower selects a third-party         • new information particular to the borrower or
    provider identified by the loan originator; and        transaction that was not relied on in providing the
  – government recording charges.                          GFE; or

• No tolerance category. The final category of fees      • other circumstances that are particular to the
  is not subject to any tolerance restriction. The         borrower or transaction, including boundary
  amounts charged for the following settlement             disputes, the need for flood insurance, or envi-
  services, included on the GFE, can change at             ronmental problems.
  settlement:                                            Changed circumstances do not include the borrow-
  – loan originator required services, where the         er’s name, the borrower’s monthly income, the
    borrower selects his or her own third-party          property address, an estimate of the value of the
    provider;                                            property, the mortgage loan amount sought, and
                                                         any information contained in any credit report
  – title services, lender’s title insurance and
                                                         obtained by the loan originator prior to providing
    owner’s title insurance, where the borrower
                                                         the GFE, unless the information changes or is found
    selects his or her own provider;
                                                         to be inaccurate after the GFE has been provided.
  – initial escrow deposit;                              In addition, market price fluctuations by themselves
  – daily interest charges; and                          do not constitute changed circumstances.

  – homeowner’s insurance.                                  Changed circumstances affecting settlement
                                                         costs are those circumstances that result in
                                                         increased costs for settlement services such that
Identification of Third-Party Settlement                 the charges at settlement would exceed the
Service Providers                                        tolerances or limits on those charges established
                                                         by the regulations.
When the loan originator permits a borrower to              Changed circumstances affecting the loan are
shop for one or more required third-party settle-        those circumstances that affect the borrower’s
ment services and select the settlement service          eligibility for the loan. For example, if underwriting
provider for such required services, the loan            and verification indicate that the borrower is
originator must list in the relevant block on page 2     ineligible for the loan provided in the GFE, the loan
of the GFE the settlement service and the estimated      originator would no longer be bound by the original
charge to be paid to the provider of each required       GFE. In such cases, if a new GFE is to be provided,
service. In addition, the loan originator must           the loan originator must do so within three business
provide the borrower with a written list of settlement   days of receiving information sufficient to establish
service providers for those required services on a       changed circumstances. The loan originator must
separate sheet of paper at the time the GFE is           document the reason that a new GFE was provided
provided.                                                and must retain documentation of any reasons for
                                                         providing a new GFE for no less than three years
                                                         after settlement.
Binding GFE (§3500.7(f))
                                                           None of the information collected by the loan
The loan originator is bound, within the tolerances      originator prior to issuing the GFE may later
provided, to the settlement charges and terms            become the basis for a ‘‘changed circumstance’’
listed on the GFE provided to the borrower, unless       upon which it may offer a revised GFE, unless:
a new GFE is provided prior to settlement (see           • it can demonstrate that there was a change in the
discussion below on changed circumstances). This           particular information,
also means that if a lender accepts a GFE issued
                                                         • that the information was inaccurate, or
by a mortgage broker, the lender is subject to the
loan terms and settlement charges listed in the          • that it did not rely on that particular information in
GFE, unless a new GFE is issued prior to settlement.       issuing the GFE. A loan originator has the burden


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                                                                         Real Estate Settlement Procedures Act


  of demonstrating nonreliance on the collected              New Home Purchases (§3500.7(f)(6))
  information, but may do so through various
                                                             In transactions involving new home purchases,
  means, including through a documented record
                                                             where settlement is expected to occur more than
  in the underwriting file or an established policy of
                                                             60 calendar days from the time a GFE is provided,
  relying on a more limited set of information in
                                                             the loan originator may provide the GFE to the
  providing GFEs.
                                                             borrower with a clear and conspicuous disclosure
   If a loan originator issues a revised GFE based           stating that at any time up until 60 calendar days
on information previously collected in issuing the           prior to closing, the loan originator may issue a
original GFE and ‘‘changed circumstances,’’ it must          revised GFE. If the loan originator does not provide
document the reasons for issuing the revised GFE,            such a disclosure, it cannot issue a revised GFE
such as its nonreliance on such information or the           except as otherwise provided in Regulation X.
inaccuracy of such information.
                                                             Volume-Based Discounts
Borrower Requested Changes                                   The RESPA Reform Rule did not formally address
(§3500.7(f)(3))                                              the legality of volume-based discounts. However,
                                                             HUD indicated in the preamble to the rule that
If a borrower requests changes to the mortgage               discounts negotiated between loan originators and
loan identified in the GFE that change the settle-           other settlement service providers, where the
ment charges or the terms of the loan, the loan              discount is ultimately passed on to the borrower in
originator may provide a revised GFE to the                  full, is not, depending on the circumstances of a
borrower. If a revised GFE is provided, the loan             particular transaction, a violation of section 8 of
originator must do so within three business days of          RESPA.8
the borrower’s request.
                                                             Uniform Settlement Statement
Expiration of Original GFE (§ 3500.7(f)(4))                  (HUD-1 or HUD-1A) (§3500.8)
If a borrower does not express an intent to continue         Section 4 of RESPA requires the person conducting
                                                             the settlement (settlement agent) to provide the
with an application within 10 business days after
                                                             borrower with a HUD-1 Settlement Statement at or
the GFE is provided, or such longer time provided
                                                             before settlement that clearly itemizes all charges
by the loan originator, the loan originator is no
                                                             imposed on the buyer and the seller in connection
longer bound by the GFE.
                                                             with the settlement. The RESPA Reform rule
                                                             included a revised HUD-1/1A Settlement Statement
                                                             form that was required as of January 1, 2010. The
Interest Rate Dependent Charges and Terms                    HUD-1 is used for transactions in which there is a
(§3500.7(f)(5))                                              borrower and seller. For transactions in which there
If the interest rate has not been locked by the              is a borrower and no seller (refinancings and
borrower, or a locked interest rate has expired, all         subordinate lien loans), the HUD-1 may be com-
interest rate-dependent charges on the GFE are               pleted by using the borrower’s side of the settle-
subject to change. The charges that may change               ment statement. Alternatively, the HUD-1A may be
include the charge or credit for the interest rate           used. However, no settlement statement is required
chosen, the adjusted origination charges, per diem           for home equity plans subject to the Truth in
interest, and loan terms related to the interest rate.       Lending Act (TILA) and Regulation Z. Appendix A
However, the loan originator’s origination charge            contains the HUD-1/1A forms and instructions for
(listed in Block 1 of page 2 of the GFE) is not              completing them. The HUD-1/1A forms are also
subject to change, even if the interest rate floats,         available at www.hud.gov/offices/adm/hudclips/
unless there is another changed circumstance or              forms/hud1.cfm.
borrower-requested change.
  If the borrower later locks the interest rate, a new       Key RESPA Reform Enhancements to
GFE must be provided showing the revised interest            the HUD-1/1A Settlement Statement
rate dependent charges and terms. All other
                                                             While the RESPA Reform Rule did not include any
charges and terms must remain the same as on the
                                                             substantive changes to the first page of the
original GFE, unless changed circumstances or
                                                             HUD-1/1A form, there were changes to the second
borrower-requested changes result in increased
                                                             page of the form to facilitate comparison between
costs for settlement services or affect the borrow-
er’s eligibility for the specific loan terms identified in
the original GFE.                                             8. 73 FR 68204, 68232 (November 17, 2008).


Consumer Compliance Handbook                                                                          RESPA • 7 (6/10)
Real Estate Settlement Procedures Act



the HUD-1/1A and the GFE. Each designated line            section. The loan originator must provide the
on the second page of the revised HUD-1/1A                information in a format that permits the settlement
includes a reference to the relevant line from the        agent to enter the information in the appropriate
GFE.                                                      spaces on the HUD-1/1A, without having to refer to
                                                          the loan documents.
   With respect to disclosure of ‘‘no cost’’ loans
where ‘‘no cost’’ refers only to the loan originator’s
fees (see section L, subsection 800 of the HUD-1          Average Charge Permitted
form), the amounts shown for the ‘‘origination
charge’’ and the ‘‘credit or charge for the interest      As of January 16, 2009, an average charge may be
rate chosen’’ should offset each other, so that the       stated on the HUD-1/1A if such average charge is
‘‘adjusted origination charge’’ is zero.                  computed in accordance with section 3500.8(b)(2).
                                                          All settlement service providers, including loan
   In the case of a ‘‘no cost’’ loan where ‘‘no cost’’    originators, are permitted to list the average charge
encompasses loan originator and third party fees,         for a settlement service on the HUD-1/1A Settle-
all third party fees must be itemized and listed in       ment Statement (and on the GFE) rather than the
the borrower’s column on the HUD-1/1A. These              exact cost for that service.
itemized charges must be offset with a negative
adjusted origination charge (Line 803) and recorded          The method of determining the average charge
in the columns.                                           is left up to the settlement service provider. The
                                                          average charge may be used as the charge for any
   To further facilitate comparability between the        third party vendor charge, not for the provider’s
forms, the revised HUD-1 includes a new third             own internal charges. The average charge also
page (second page of the HUD-1A) that allows              cannot be used where the charge is based on the
borrowers to compare the loan terms and settle-           loan amount or the value of the property.
ment charges listed on the GFE with the terms and
                                                             The average charge may be used for any third
charges listed on the closing statement. The first
                                                          party settlement service, provided that the total
half of the third page includes a comparison chart
                                                          amounts received from borrowers for that service
that sets forth the settlement charges from the GFE
                                                          for a particular class of transactions do not exceed
and the settlement charges from the HUD-1 to
                                                          the total amounts paid to providers of that service
allow the borrower to easily determine whether the
                                                          for that class of transactions. A class of transac-
settlement charges exceed the charges stated on
                                                          tions may be defined based on the period of time,
the GFE. If any charges at settlement exceed the
                                                          type of loan, or geographic area. If an average
charges listed on the GFE by more than the
                                                          charge is used in any class of transactions defined
permitted tolerances, the loan originator may cure
                                                          by the loan originator, then the loan originator must
the tolerance violation by reimbursing to the
                                                          use the same average charge for every transaction
borrower the amount by which the tolerance was
                                                          within that class. The average charge must be
exceeded. A borrower will be deemed to have
                                                          recalculated at least every six months.
received timely reimbursement if the financial
institution delivers or places the payment in the mail      A settlement service provider that uses an
within 30 calendar days after settlement.                 average charge for a particular service must
                                                          maintain all documents that were used to calculate
   Inadvertent or technical errors on the settlement
                                                          the average charge for at least three years after any
statement are not deemed to be a violation of
                                                          settlement in which the average charge was used.
section 4 of RESPA, if a revised HUD-1/1A is
provided to the borrower within 30 calendar days
after settlement.
                                                          Printing and Duplication of the
   The second half of the third page sets forth the
loan terms for the loan received at settlement in a       Settlement Statement (§3500.9)
format that reflects the summary of loan terms on
                                                          Financial institutions have numerous options for
the first page of the GFE, but with additional loan
                                                          layout and format in reproducing the HUD-1 and
related information that would be available at
                                                          HUD-1A that do not require prior HUD approval
closing. The note at the bottom of the page
                                                          such as size of pages; tint or color of pages; size
indicates that the borrower should contact the
                                                          and style of type or print; spacing; printing on
lender if the borrower has questions about the
                                                          separate pages, front and back of a single page or
settlement charges or loan terms listed on the form.
                                                          on one continuous page; use of multi-copy tear-out
   Section 3500.8(b) and the instructions for com-        sets; printing on rolls for computer purposes;
pleting the HUD-1/1A Settlement Statement pro-            addition of signature lines; and translation into any
vide that the loan originator shall transmit sufficient   language. Other changes may be made only with
information to the settlement agent to allow the          the approval of the Secretary of Housing and Urban
settlement agent to complete the ‘‘loan terms’’           Development.


8 (6/10) • RESPA                                                                   Consumer Compliance Handbook
                                                                     Real Estate Settlement Procedures Act



One-Day Advance Inspection of the                        Penalties and Liabilities
Settlement Statement (§3500.10)                          Civil and criminal liability is provided for violating
                                                         the prohibition against kickbacks and unearned
Upon request by the borrower, the HUD-1 or
                                                         fees including:
HUD-1A must be completed and made available
for inspection during the business day immediately         • Civil liability to the parties affected, equal to
preceding the day of settlement, setting forth those         three times the amount of any charge paid for
items known at that time by the person conducting            such settlement service.
the closing.                                               • The possibility that the costs associated with
                                                             any court proceeding together with reasonable
                                                             attorney’s fees could be recovered.
Delivery (§3500.10(a) and (b))
                                                           • A fine of not more than $10,000 or imprison-
The completed HUD-1 or HUD-1A must be mailed                 ment for not more than one year or both.
or delivered to the borrower, the seller (if there is
one), the lender (if the lender is not the settlement
agent), and/or their agents at or before settlement.     Affiliated Business Arrangements
However, the borrower may waive the right of             (§3500.15)
delivery by executing a written waiver at or before
settlement. The HUD-1 or HUD-1A shall be mailed          If a loan originator has either an affiliate relationship
or delivered as soon as practicable after settlement     or a direct or beneficial ownership interest of more
if the borrower or borrower’s agent does not attend      than 1% in a provider of settlement services and
the settlement.                                          the loan originator directly or indirectly refers
                                                         business to the provider, it is an affiliated business
                                                         arrangement. An affiliated business arrangement is
Retention (§3500.10(e))                                  not a violation of section 8 of RESPA and of section
                                                         3500.14 of Regulation X, if the following conditions
A lender must retain each completed HUD-1 or
                                                         are satisfied:
HUD-1A and related documents for five years after
settlement, unless the lender disposes of its              • Prior to the referral, the person making each
interest in the mortgage and does not service the            referral has provided to each person whose
mortgage. If the loan is transferred, the lender shall       business is referred an Affiliated Business
provide a copy of the HUD-1 or HUD-1A to the                 Arrangement Disclosure Statement (Appendix
owner or servicer of the mortgage as part of the             D of Regulation X). This disclosure shall specify
transfer. The owner or servicer shall retain the             the following:
HUD-1 or HUD-1A for the remainder of the five-year         – nature of the relationship (explaining the own-
period.                                                      ership and financial interest) between the
                                                             provider and the loan originator, and
Prohibition of Fees for Preparing                          – estimated charge or range of charges gener-
                                                             ally made by such provider.
Federal Disclosures (§3500.12)
                                                           This disclosure must be provided on a separate
For loans subject to RESPA, no fee may be                  piece of paper either at the time of loan
charged for preparing the Settlement Statement or          application, when the GFE is provided, or at the
the Escrow Account statement or any disclosures            time of the referral.
required by TILA.
                                                           The loan originator may not require the use of
                                                           such a provider, with the following exception: the
Prohibition Against Kickbacks and                          institution may require a buyer, borrower or seller
                                                           to pay for the services of an attorney, credit
Unearned Fees (§3500.14)                                   reporting agency or real estate appraiser chosen
Any person who gives or receives a fee or a thing of       by the institution to represent its interest. The
value (payments, commissions, fees, gifts or spe-          loan originator may only receive a return on
cial privileges) for the referral of settlement busi-      ownership or franchise interest or payment
ness is in violation of section 8 of RESPA. Payments       otherwise permitted by RESPA.
in excess of the reasonable value of goods
provided or services rendered are considered             Title Companies (§3500.16)
unearned fees. Appendix B of Regulation X pro-
vides guidance on the meaning and coverage of            Sellers that hold legal title to the property being
the prohibition against kickbacks and unearned           sold are prohibited from requiring borrowers, either
fees.                                                    directly or indirectly, as a condition to selling the


Consumer Compliance Handbook                                                                       RESPA • 9 (6/10)
Real Estate Settlement Procedures Act


property, to use a particular title company.                     computation year. In addition, if the new servicer
                                                                 retains the monthly payments and accounting
   Civil liability for violating the provision that a
                                                                 method used by the old servicer, then the new
financial institution (seller) cannot require a bor-
                                                                 servicer may continue to use the same computation
rower to use a particular title company is an amount
                                                                 year established by the old servicer or it may
equal to three times all charges made for such title
                                                                 choose a different one, using a short-year state-
insurance.
                                                                 ment.

Escrow Accounts (§3500.17)
                                                                 Shortages, Surpluses, and Deficiency
On October 26, 1994, HUD issued its final rule                   Requirements (§3500.17(f))
changing the accounting method for escrow
accounts, which was originally effective April 24,               The servicer shall conduct an annual escrow
1995. The rule establishes a national standard                   account analysis to determine whether a surplus,
accounting method, known as aggregate account-                   shortage, or deficiency exists as defined under
ing.9 The final rule also established formats and                section 3500.17(b).
procedures for initial and annual escrow account
                                                                   If the escrow account analysis discloses a
statements.
                                                                 surplus, the servicer shall, within 30 days from the
   The amount of escrow funds that can be                        date of the analysis, refund the surplus to the
collected at settlement or upon creation of an                   borrower if the surplus is greater than or equal to
escrow account is restricted to an amount sufficient             $50. If the surplus is less than $50, the servicer may
to pay charges, such as taxes and insurance, that                refund such amount to the borrower, or credit such
are attributable to the period from the date such                amount against the next year’s escrow payments.
payments were last paid until the initial payment                These provisions apply as long as the borrower’s
date. Throughout the life of an escrow account, the              mortgage payment is current at the time of the
servicer may charge the borrower a monthly sum                   escrow account analysis.
equal to one-twelfth of the total annual escrow
                                                                   If the escrow account analysis discloses a
payments that the servicer reasonably anticipates
                                                                 shortage of less than one month’s escrow pay-
paying from the account. In addition, the servicer
                                                                 ments, then the servicer has three possible courses
may add an amount to maintain a cushion no
                                                                 of action:
greater than one-sixth of the estimated total annual
payments from the account.                                         • the servicer may allow the shortage to exist and
                                                                     do nothing to change it;

Escrow Account Analysis                                            • the servicer may require the borrower to repay
                                                                     the shortage amount within 30 days; or
(§3500.17(c)(2) and (3) and 3500.17(k))
                                                                   • the servicer may require the borrower to repay
Before establishing an escrow account, a servicer
                                                                     the shortage amount in equal monthly pay-
must conduct an analysis to determine the periodic
                                                                     ments over at least a 12-month period.
payments and the amount to be deposited. The
servicer shall use an escrow disbursement date                   If the shortage is more than or equal to one month’s
that is on or before the deadline to avoid a penalty             escrow payment, then the servicer has two pos-
and may make annual lump sum payments to take                    sible courses of action:
advantage of a discount.                                           • the servicer may allow the shortage to exist and
                                                                     do nothing to change it; or
Transfer of Servicing (§3500.17(e))                                • the servicer may require the borrower to repay
If the new servicer changes either the monthly                       the shortage in equal monthly payments over at
payment amount or the accounting method used                         least a 12-month period.
by the old servicer, then it must provide the                    If the escrow account analysis discloses a defi-
borrower with an initial escrow account statement                ciency, then the servicer may require the borrower
within 60 days of the date of transfer. When the new             to pay additional monthly deposits to the account to
servicer provides an initial escrow account state-               eliminate the deficiency.
ment, it shall use the effective date of the transfer of
servicing to establish the new escrow account                      If the deficiency is less than one month’s escrow
                                                                 account payment, then the servicer:
                                                                   • may allow the deficiency to exist and do
  9. Existing escrow accounts were allowed a three-year
phase-in period to convert to the aggregate accounting method.       nothing to change it;
The 2008 RESPA Reform Rule eliminated provisions in section
3500.17 that related to the phase-in period for aggregate          • may require the borrower to repay the defi-
accounting, effective January 16, 2009.                              ciency within 30 days; or


10 (6/10) • RESPA                                                                         Consumer Compliance Handbook
                                                                   Real Estate Settlement Procedures Act



  • may require the borrower to repay the defi-            during the past year,
    ciency in two or more equal monthly payments.        • amount paid from the account for taxes,
If the deficiency is greater than or equal to one          insurance premiums, and other charges,
month’s escrow payment, the servicer may allow           • balance at the end of the period,
the deficiency to exist and do nothing to change it,
or require the borrower to repay the deficiency in       • explanation of how the surplus, shortage, or
two or more equal monthly payments.                        deficiency is being handled, and

  These provisions apply as long as the borrower’s       • if applicable, the reasons why the estimated
mortgage payment is current at the time of the             low monthly balance was not reached.
escrow account analysis.
  A servicer must notify the borrower at least once    Short-Year Statements (§3500.17(i)(4))
during the escrow account computation year if a        Short-year statements can be issued to end the
shortage or deficiency exists in the account.          escrow account computation year and establish
                                                       the beginning date of the new computation year.
                                                       Short-year statements may be provided upon the
Initial Escrow Account Statement                       transfer of servicing and are required upon loan
(§3500.17(g))                                          payoff. The statement is due to the borrower within
After analyzing each escrow account, the servicer      60 days after receiving the pay-off funds.
must submit an initial escrow account statement to
the borrower at settlement or within 45 calendar       Timely Payments (§3500.17(k))
days of settlement for escrow accounts that are
established as a condition of the loan.                The servicer shall pay escrow disbursements by
                                                       the disbursement date. In calculating the disburse-
   The initial escrow account statement must con-
                                                       ment date, the servicer must use a date on or
tain:
                                                       before the deadline to avoid a penalty and may
  • the monthly mortgage payment,                      make annual lump sum payments to take advan-
  • the portion going to escrow,                       tage of a discount.

  • itemize estimated taxes, insurance premiums,
    and other charges,                                 Record Keeping (3500.17(l))
  • the anticipated disbursement dates of those        Each servicer shall keep records that are easily
    charges,                                           retrievable, reflecting the servicer’s handling of
  • the amount of the cushion, and                     each borrower’s escrow account. The servicer shall
                                                       maintain the records for each escrow account for at
  • a trial running balance.                           least five years after the servicer last serviced the
                                                       account.

Annual Escrow Account Statement
(§3500.17(i))                                          Penalties (§3500.17(m))
A servicer shall submit to the borrower an annual      Failure to provide an initial or annual escrow
statement for each escrow account within 30 days       account statement to a borrower can result in the
of the completion of the computation year. The         financial institution or the servicer being assessed
servicer must conduct an escrow account analysis       a civil penalty of $75 for each such failure, with the
before submitting an annual escrow account state-      total for any 12 month period not to exceed
ment to the borrower.                                  $130,000. If the violation is due to intentional
                                                       disregard, the penalty is $110 for each failure
  The annual escrow account statements must            without any annual cap on liability.
contain:
  • the account history,
                                                       Mortgage Servicing Transfer
  • projections for the next year,
                                                       Disclosures (§3500.21)
  • current mortgage payment and portion going
    to escrow,                                         The disclosures related to the transfer of mortgage
                                                       servicing are required for first mortgage liens,
  • amount of past year’s monthly mortgage pay-
                                                       including all refinancing transactions. Subordinate
    ment and portion that went into the escrow
                                                       lien loans and open-end lines of credit (home
    account,
                                                       equity plans), that are covered under the TILA and
  • total amount paid into the escrow account          Regulation Z, are exempt from this section.


Consumer Compliance Handbook                                                                 RESPA • 11 (6/10)
Real Estate Settlement Procedures Act



   A financial institution that receives an application       tions of service or subservicers; and
for a federally related mortgage loan is required to        • Transfers between master servicers, when the
provide the servicing disclosure statement to the             subservicer remains the same.
borrower within three business days after receipt of
the application. The 2008 RESPA Reform Rule
included a technical revision to the mortgage             Servicers Must Respond to Borrower’s
servicing disclosure statement in Appendix MS-1 to        Inquiries (§3500.21(e))
Regulation X, effective January 16, 2009. The rule
streamlined the initial servicing disclosure state-       A financial institution servicer must respond to a
ment language to be consistent with statutory             borrower’s qualified written request for information
changes.                                                  relating to the servicing of the loan and take
                                                          appropriate action within established time frames
   When a federally related mortgage loan is              after receipt of the inquiry. Generally, the financial
assigned, sold or transferred, the transferor (present    institution must provide written acknowledgment
servicer) must provide a disclosure at least 15 days      within 20 business days, and take certain specified
before the effective date of the transfer. A transfer     actions within 60 business days of receipt of such
of servicing notice from the transferee (new ser-         inquiry. The written inquiry must include the name
vicer) must be provided not more than 15 days             and account number of the borrower and the
after the effective date of the transfer. Both notices    reasons the borrower believes the account is in
may be combined into one notice if delivered to the       error.
borrower at least 15 days before the effective date
of the transfer. The disclosure must include:                During the 60 business day period following
                                                          receipt of a qualified written request from a
  • The effective date of the transfer.                   borrower relating to a payment, a financial institu-
  • The name, address for consumer inquiries, and         tion may not provide adverse information regarding
    toll-free or collect-call telephone number of the     any payment that is the subject of the qualified
    transferee servicer.                                  written request to any consumer reporting agency.
  • A toll-free or collect-call telephone number for
    an employee of the transferor servicer who can        Relationship to State Law (§3500.21(h)
    be contacted by the borrower to answer                and 12 USC 2616)
    servicing questions.
                                                          Financial institutions complying with the mortgage
  • The date on which the transferor servicer will        servicing transfer disclosure requirements of RESPA
    cease accepting payments relating to the loan         are considered to have complied with any State law
    and the date on which the transferee servicer         or regulation requiring notice to a borrower at the
    will begin to accept such payments. The dates         time of application or transfer of a mortgage.
    must either be the same or consecutive dates.
                                                            Other state laws shall not be affected by RESPA,
  • Any information concerning the effect of the          except to the extent that they are inconsistent and
    transfer on the availability of optional insurance    then only to the extent of the inconsistency. The
    and any action the borrower must take to              Secretary of Housing and Urban Development is
    maintain coverage.                                    authorized, after consulting with the appropriate
  • A statement that the transfer does not affect the     federal agencies, to determine whether such
    terms or conditions of the mortgage (except as        inconsistencies exist.
    related to servicing).
  • A statement of the borrower’s rights in connec-       Penalties and Liabilities (§3500.21(f))
    tion with complaint resolution.
                                                          Failure to comply with any provision of sec-
During the 60-day period beginning on the date of         tion 3500.21 will result in actual damages and,
transfer, no late fee can be imposed on a borrower        where there is a pattern or practice of noncompli-
who has made the payment to the wrong servicer.           ance, any additional damages in an amount not to
  The following transfers are not considered an           exceed $1,000. In class action cases, each
assignment, sale, or transfer of mortgage loan            borrower may receive actual damages and addi-
servicing for purposes of this requirement if there is    tional damages, as the court allows, up to $1,000
no change in the payee, address to which payment          for each member of the class, except that the total
must be delivered, account number, or amount of           amount of damages in any class action may not
payment due:                                              exceed the lesser of $500,000 or one percent of the
                                                          net worth of the servicer. In addition, costs of the
  • Transfers between affiliates;
                                                          action and attorney fees may be awarded in any
  • Transfers resulting from mergers or acquisi-          successful action.



12 (6/10) • RESPA                                                                  Consumer Compliance Handbook
Real Estate Settlement Procedures Act (RESPA)
Examination Objectives and Procedures


Examination Objectives                                  4. Review written loan policies and operating
                                                           procedures in connection with federally related
1. To determine if the financial institution has           mortgage loans and discuss them with institu-
   established procedures to ensure compliance             tion personnel.
   with RESPA.
                                                           a. Determine whether the financial institution
2. To determine that the financial institution does
                                                              has policies and procedures concerning
   not engage in any practices prohibited by
                                                              what information will be collected from
   RESPA, such as kickbacks, payment or receipt
                                                              applicants in connection with issuing a
   of referral fees or unearned fees, or excessive
                                                              GFE, and what information will be relied on
   escrow assessments.
                                                              to issue a GFE.
3. To determine if the Special Information Booklet,
                                                           b. Determine whether the financial institution
   Good Faith Estimate (GFE) form, Uniform
                                                              has policies and procedures concerning
   Settlement Statement (Form HUD-1 or HUD
                                                              provision of a revised GFE in the event of
   1A), mortgage servicing transfer disclosures,
   and other required disclosures are in a form               changed circumstances.
   that complies with Regulation X, are properly           c. Determine whether the financial institution
   completed, and are provided to borrowers                   has policies and procedures concerning
   within prescribed time periods.                            provision of a revised GFE for transactions
4. To determine if the institution is submitting the          involving new home purchases.
   required initial and annual escrow account              d. Determine whether the financial institution
   statements to borrowers as applicable, and                 has policies and procedures to cure a
   complying with established limitations on es-              tolerance violation by reimbursing the bor-
   crow account arrangements.                                 rower the amount by which the tolerance
5. To determine whether the institution is respond-           was exceeded within 30 calendar days
   ing to borrower inquiries for information relating         from date of settlement.
   to the servicing of their loans in compliance           e. Determine whether the financial institution
   with the provisions of RESPA.                              has polices and procedures to cure a
                                                              technical or inadvertent error on the HUD-
                                                              1/1A by providing a revised settlement
Examination Procedures                                        statement to the borrower within 30 calen-
                                                              dar days of settlement.
Management and Policy-Related
                                                        5. Interview mortgage lending personnel to deter-
Examination Procedures
                                                           mine:
If the financial institution has loans covered by          a. Identity of persons or entities referring
RESPA, determine whether the institution’s policies,          federally related mortgage loan business;
practices, and procedures are in compliance.
                                                           b. The nature of services provided by referral
1. Review the types of loans covered by RESPA                 sources, if any;
   and applicable exemptions.
                                                           c. Settlement service providers used by the
2. Review the Special Information Booklet, Good               institution;
   Faith Estimate (GFE) form, Uniform Settlement
   Statement (Form HUD-1 or HUD-1A), mortgage              d. When the Special Information Booklet is
   servicing transfer disclosure forms, and affili-           given;
   ated business arrangement disclosure form for           e. The timing of the GFE and how fee informa-
   compliance with the requirements of Regula-                tion is determined;
   tion X. Review standardized and model forms
                                                           f. Any providers whose services are required
   in the appendices to the regulation.
                                                              by the institution;
3. If electronic disclosures are provided, deter-
                                                           g. How borrower inquiries regarding loan
   mine whether the institution has policies and
                                                              servicing are handled and within what time
   procedures to provide electronic delivery in
                                                              frames;
   accordance with the Electronic Signatures
   in Global and National Commerce Act                     h. Whether escrow arrangements exist on
   (ESIGN).                                                   mortgage loans.


Consumer Compliance Handbook                                                               RESPA • 13 (6/10)
Real Estate Settlement Procedures Act: Examination Objectives and Procedures



 6. Assess the overall level of knowledge and                    service providers for the services listed on
    understanding of mortgage lending personnel.                 the GFE.


Special Information Booklet                               Uniform Settlement Statement Form
 7. Determine through discussion with manage-             (HUD-1 and HUD-1A)
    ment and review of credit files whether the
                                                          11. Using the same sample of loan files as used for
    Special Information Booklet, if required, is
                                                              the review of the GFE, review the Uniform
    provided within 3 business days after the
                                                              Settlement Statement (HUD-1 or HUD-1A, as
    financial institution or broker receives a written
                                                              appropriate) [§ 3500.8 and Appendix A] to
    application for a loan. [§ 3500.6(a)(1)].
                                                              determine whether:
                                                              a. Charges are properly itemized in accor-
Good Faith Estimate (GFE) Form                                   dance with the instructions for completion
                                                                 of the HUD-1 or HUD-1A (Appendix A).
 8. Determine whether the financial institution pro-
    vides a GFE of charges for settlement services,           b. All charges paid by the borrower and the
    if required, within three business days after                seller are itemized and include the name of
    receipt of a written application. [§ 3500.7(a)].             the recipient. [§ 3500.8(b), Appendix A].
 9. Review the GFE to determine if it appears                 c. Average charges for settlement services
    exactly as set forth in Appendix C.                          are calculated in accordance with sec-
                                                                 tion 3500.8(b)(2).
10. Review a sample of loan files that include GFEs
    to determine the following:                               d. Charges required by the financial institution
                                                                 but paid outside of closing are itemized on
    a. Whether the financial institution followed
                                                                 the settlement statement, marked as ‘‘paid
       GFE application requirements.
                                                                 outside of closing’’ or ‘‘P.O.C.,’’ but not
    b. If the institution provided a revised GFE to              included in cost totals. [§ 3500.8(b); Appen-
       the applicant due to changed circum-                      dix A].
       stances, determine whether institution fol-
                                                          12. If the financial institution conducts the settle-
       lowed regulatory requirements for issuing a
                                                              ment, determine whether:
       revised GFE due to changed circum-
       stances.                                               a. The borrower, upon request, is allowed to
                                                                 inspect the HUD-1 or HUD-1A at least one
    c. Whether the GFE was completed as re-
                                                                 business day prior to settlement.
       quired in Regulation X and in the instruc-
                                                                 [§ 3500.10(a)].
       tions (§ 3500.7 and Appendix C) and
       whether it included the following information:         b. The HUD-1 or HUD-1A is provided to the
                                                                 borrower and seller at or before settlement
               (i) Interest rate expiration date,
                                                                 (except where the borrower has waived the
              (ii) Settlement charges expiration date,           right to delivery and in the case of exempt
              (iii) Rate lock period,                            transactions). [§ 3500.10(b)].

              (iv) Number of days before settlement           c. In cases where the right to delivery is
                   the interest rate must be locked, if          waived or the transaction is exempt, the
                   applicable,                                   HUD-1/1A is mailed as soon as practicable
                                                                 after settlement. [§ 3500.10(b),(c), and (d)].
              (v) Summary of loan information,
                                                          13. Determine whether, in the case of an inadvert-
              (vi) Escrow account information,                ent or technical error on the HUD-1 or HUD-1A,
             (vii) Estimates for settlement charges,          the financial institution provides a revised
                   and                                        HUD-1/1A to the borrower within 30 calendar
                                                              days after settlement. [§ 3500.8(c)].
            (viii) In left hand column on trade-off
                   table, information for loan in the     14. Review the HUD-1 or HUD-1A form prepared in
                   GFE.                                       connection with each GFE reviewed to deter-
                                                              mine if the amount stated for any itemized
    d. Whether, for no cost loans, all third party            service exceeds the amount shown on the GFE
       fees paid by the financial institution are             for that service. If the amount stated on the
       itemized and listed in the appropriate                 HUD-1 exceeds the amount shown on the GFE
       blocks on the second page of the GFE.                  and such overcharge violates the tolerance for
    e. Whether a separate sheet was provided                  that category of settlement services, determine
       with the GFE that identifies the settlement            whether the financial institution cured the


14 (6/10) • RESPA                                                                  Consumer Compliance Handbook
                           Real Estate Settlement Procedures Act: Examination Objectives and Procedures



    tolerance violation by reimbursing to the bor-             transferor servicer that can be contacted by
    rower the amount by which the tolerance was                the borrower for answers to servicing trans-
    exceeded at settlement or within 30 calendar               fer inquiries;
    days from date of settlement. [§ 3500.7(i)].            e. The date on which the present servicer will
15. Determine whether HUD-1 and HUD-1A forms                   cease accepting payments and the date
    are retained for five years. If the financial              the new servicer will begin accepting
    institution disposes of its interest in the mort-          payments relating to the transferred loan;
    gage and does not service the loan, determine           f. Any information concerning the effect of the
    whether the HUD-1 or HUD-1A form is trans-                 transfer on the availability or terms of
    ferred to the new asset owner with the loan file.          optional insurance and any action the
    [§ 3500.10(e)].                                            borrower must take to maintain coverage;
                                                               and
Mortgage Servicing Transfer Disclosure                      g. A statement of the borrowers rights in
                                                               connection with complaint resolution (Ap-
16. Determine whether the disclosure form is
                                                               pendix MS-2).
    substantially in conformity with the model
    disclosure in Appendix MS-1.
17. Determine that the mortgage servicing transfer      Responsibilities of Servicer
    disclosure was provided to the applicant within     23. Through a review of late notices, or otherwise if
    three business days after receipt of the appli-         the transferor servicer received payment, de-
    cation. [§ 3500.21(c)].                                 termine that no late fees have been imposed
18. Determine that the disclosure states whether            and that no payments have been treated as
    the loan may be assigned, sold, or transferred          late within 60 days following a transfer of
    while the loan is outstanding. [§ 3500.21(b)(2)].       servicing. [§ 3500.21(d)(5)].
                                                        24. Determine that the institution, as loan servicer
                                                            for mortgage loans and refinancings subject to
Notice to Borrower of Transfer of                           RESPA, responds to borrower inquiries relating
Mortgage Servicing                                          to these loans as prescribed in Regulation X,
19. Determine whether the institution has trans-            including:
    ferred or received mortgage servicing rights.           a. Provides the notice of receipt of inquiry for
20. If it has transferred servicing rights, determine          qualified written requests from borrowers
    whether notice to the borrower was given at                within 20-business days (unless the action
    least 15 days prior to the transfer.                       requested is taken within that period and
    [§ 3500.21(d)(2)].                                         the borrower is notified in writing of that
                                                               action). [§ 3500.21(e)(1)].
21. If it has received servicing rights, determine
    whether notice was given to the borrower within         b. Provides written notification of the correc-
    15 days after the transfer. [§ 3500.21(d)(2)].             tions taken on the account, or statement of
                                                               the reasons the account is correct or
22. Determine whether the notices by transferor                explanation why the information requested
    and transferee include the following information           is unavailable not later than 60-business
    (sample language for the notice of transfer is             days after receipt of the qualified written
    contained in Appendix MS-2). [§3500.21(d)(3)]:             request from the borrower. [§ 3500.21(e)(3)].
    a. The effective date of the transfer;                  c. Determine that the institution does not
    b. A statement that the transfer does not affect           provide information to any consumer report-
       the terms or conditions of the mortgage,                ing agency regarding overdue payment
       other than terms directly related to its                when investigating a qualified written re-
       servicing;                                              quest from borrower regarding disputed
                                                               payments during this 60-business day pe-
    c. The name, consumer inquiry addresses                    riod. [§ 3500.21(e)(4)(I)].
       (including, at the option of the servicer, a
       separate address where qualified written
       requests must be sent), and a toll-free or       No Fees for RESPA Disclosures
       collect call telephone number for an em-
                                                        25. a. Determine whether the financial institution
       ployee or department of the transferee
                                                               charges a fee specifically for preparing and
       servicer;
                                                               distributing the HUD-1 forms, escrow state-
    d. A toll-free or collect call telephone number            ments or documents required under the
       for an employee or department of the                    Truth in Lending Act. [§ 3500.12].


Consumer Compliance Handbook                                                                  RESPA • 15 (6/10)
Real Estate Settlement Procedures Act: Examination Objectives and Procedures



    b. If any fee is charged before providing a               [§ 3500.15(b)(2)].
       GFE, determine whether such fee is limited
       to the cost of a credit report. [§ 3500.7(a)(4)].
                                                           Escrow Accounts
                                                           If the institution maintains escrow accounts in
Purchase of Title Insurance
                                                           connection with a federally related mortgage loan,
26. When the financial institution owns the property       complete the following procedures.
    being sold, determine whether it requires that
                                                           32. Determine whether the institution performed an
    title insurance be purchased from a particular
                                                               initial escrow analysis [§ 3500.17(c)(2)] and
    company. [§ 3500.16].
                                                               provided the initial escrow statement
                                                               [§ 3500.17(g)]. The statement must contain the
Payment or Receipt of Referral or                              following:
Unearned Fees                                                 a. Amount of monthly payment
27. Determine if management is aware of the                   b. Portion of the monthly payment being
    prohibitions against payment or receipt of                   placed in escrow
    kickbacks and unearned fees. [RESPA § 8;
    § 3500.14].                                               c. Charges to be paid from the escrow
                                                                 account during the first 12 months
28. Through interviews with institution manage-
    ment and personnel, file reviews, reviews of              d. Disbursement dates
    GFE forms, and HUD-1 and HUD-1A forms,                    e. Amount of cushion
    determine if federally related mortgage loan
                                                           33. Determine if the statement was given to the
    transactions are referred by brokers, affiliates,
                                                               borrower at settlement or within 45 days after
    or other parties. Identify those parties. Also,
                                                               the escrow account was established. This
    identify persons or entities to which the institu-
                                                               statement may be incorporated into the HUD-1
    tion refers services in connection with a
                                                               statement. [§ 3500.17(g)(1) and (2)].
    federally related mortgage transaction.
                                                           34. Determine whether the institution performs an
    a. Identify the types of services rendered by
                                                               annual analysis of the escrow account.
       the broker, affiliate, or service provider.
                                                               [§ 3500.17(c)(3) and (7), and 3500.17(i)].
    b. By a review of the institution’s general
                                                           35. Determine whether the annual escrow account
       ledger or otherwise, determine if fees were
                                                               statement is provided to the borrower within 30
       paid to the institution or any parties identi-
                                                               days of the end of the computation year.
       fied.
                                                               [§ 3500.17(i)].
    c. Confirm that any fees paid to the broker,
                                                           36. Determine if the annual escrow statement
       affiliate, service provider, or other party
                                                               contains the following:
       meet the requirements of section 3500.14(g)
       and are for goods or facilities actually               a. Amount of monthly mortgage payment and
       furnished or services actually performed.                 portion that was placed in escrow
       This includes payments to an affiliate or the          b. Amount of past year’s monthly mortgage
       affiliate’s employees.                                    payment and portion that went into escrow
                                                              c. Total amount paid into escrow during the
Affiliated Business Arrangements                                 past computation year
29. Determine from the HUD-1 or HUD-1A and                    d. Total amount paid out of escrow account
    from interviews with institution management if               during same period for taxes, insurance,
    the institution referred a borrower to a settle-             and other charges
    ment service provider.
                                                              e. Balance in the escrow account at the end of
30. If the financial institution referred a borrower to          the period
    an affiliated settlement service provider, deter-
                                                              f. How a surplus, shortage, or deficiency is to
    mine whether the Affiliated Business Arrange-
                                                                 be paid/handled
    ment disclosure statement (Appendix D) was
    provided as required by section 3500.15(b)(1).            g. If applicable, the reason why estimated low
                                                                 monthly balance was not reached.
31. Other than an attorney, credit reporting agency,
                                                                 [§ 3500.17(i)(1)].
    or appraiser representing the lender, if the
    financial institution referred a borrower to a         37. Determine whether monthly escrow payments
    settlement service provider, determine whether             following settlement are within the limits of
    the institution required the use of the provider.          section 3500.17(c).


16 (6/10) • RESPA                                                                  Consumer Compliance Handbook
Real Estate Settlement Procedures Act (RESPA)
Examination Checklist


Examination Checklist
 1. Are written loan policies in connection with federally related mortgage loans
    in compliance with Regulation X?                                                     Yes           No
 2. Does the institution have established operating procedures which address
    the requirements of Regulation X?                                                    Yes           No
 3. Are mortgage lending personnel knowledgeable of the requirements of
    RESPA and Regulation X?                                                              Yes           No


Special Information Booklet
 4. For applicable transactions, is the Special Information Booklet provided
    within three business days after the financial institution or broker receives or
    prepares a written application for a loan?                                           Yes           No


Good Faith Estimate
 5. Does the financial institution use the required Good Faith Estimate (GFE)
    form?                                                                                Yes           No
 6. Is a GFE of charges for settlement services, if required, provided within three
    business days after an application is received or prepared?                          Yes           No
 7. Does the GFE appear in the exact form as in Appendix C to Regulation X?              Yes           No
 8. Does the GFE contain the following required elements:
    a. (i) Interest rate expiration date?                                                Yes           No
          (ii) Settlement charges expiration date?                                       Yes           No
         (iii) Rate lock period?                                                         Yes           No
         (iv) Number of days before settlement the interest rate must be locked,
              if applicable?                                                             Yes           No
          (v) Summary of loan information?                                               Yes           No
         (vi) Escrow account information?                                                Yes           No
        (vii) Estimates for settlement charges?                                          Yes           No
       (viii) In left hand column on trade-off table, information for loan in the
              GFE?                                                                       Yes           No
    b. For all loans, are all third party fees, including those paid by the financial
       institution in the case of no cost loans, itemized and listed in the
       appropriate blocks on the second page of the GFE?                                 Yes           No
    c. Did the financial institution provide a separate sheet that identifies the
       settlement service providers for the services listed?                             Yes           No


Affiliated Business Arrangements
 9. Does the financial institution refer borrowers to settlement service providers?      Yes           No
10. If the institution refers borrowers to affiliated settlement service providers, is
    the Affiliated Business Disclosure statement provided to each borrower as
    set forth in Appendix D?                                                             Yes           No
11. Other than an attorney, credit reporting agency, or appraiser representing
    the lender, does the financial institution require the use of an affiliate?          Yes           No


Uniform Settlement Statement Form (HUD-1 and HUD-1A)
12. Does the financial institution use the Uniform Settlement Statement (HUD-1 or
    HUD-1A) as appropriate?                                                              Yes           No



Consumer Compliance Handbook                                                              RESPA • 17 (6/10)
Real Estate Settlement Procedures Act: Examination Checklist



13. Does the HUD-1 or HUD-1A contain the following:
    a. Charges properly itemized for both borrower and seller in accordance
         with the instructions for completion of the HUD-1 or HUD-1A?                                 Yes           No
    b. All charges paid to someone other than the lender itemized and the
         recipient named?                                                                             Yes           No
    c. Charges required by the financial institution but paid outside of closing,
         itemized on the settlement statement, marked as ‘‘paid outside of closing’’
         or ‘‘P.O.C.’’ but not included in totals?                                                    Yes           No
    d. Where an average charge was listed for a settlement service, was the
         charge calculated in accordance with requirements set forth in sec-
         tion 3500.8(b)(2)?                                                                           Yes           No
14. From a review of the HUD-1 or HUD-1/A prepared in connection with each
    GFE reviewed, are amounts shown on the GFE the same as the fees actually
    paid by the borrower?                                                                             Yes           No
15. If a charge stated on the HUD-1/1A exceeds the charges stated on the GFE
    by more than the permitted tolerance, does the financial institution cure the
    tolerance violation by reimbursing to the borrower the amount by which the
    tolerance was exceeded at settlement, or by delivering or placing the
    payment in the mail within 30 calendar days after settlement?                                     Yes           No
16. If the financial institution conducts settlement:
    a. Is the borrower, upon request, allowed to inspect the HUD-1 or HUD-1A at
         least one day prior to settlement?                                                           Yes           No
    b. Is the HUD-1 or HUD-1A provided to the borrower and seller at
         settlement?                                                                                  Yes           No
    c. In cases where the right to delivery is waived or the transaction is exempt,
         is the statement mailed as soon as possible after settlement?                                Yes           No
17. In the case of an inadvertent or technical error on the HUD-1/1A, does the
    institution provide a revised HUD-1/1A to the borrower within 30 calendar
    days after settlement?                                                                            Yes           No
18. If the financial institution retains its interest in the mortgage and/or services it,
    is the HUD-1 or HUD-1A form retained for five years?                                              Yes           No
19. If the financial institution disposes of its interest in the mortgage and does not
    service the loan, is the HUD-1/1A transferred to the new asset owner with the
    loan file?                                                                                        Yes           No


Mortgage Servicing Transfer Disclosure
20. Does the mortgage servicing transfer disclosure form language substantially
    conform to the model disclosure in Appendix MS-1?                                                 Yes           No
21. Does the lender provide the mortgage servicing transfer disclosure within
    three business days after receipt of the application?                                             Yes           No
22. Does the disclosure state whether the loan may be assigned or transferred
    while outstanding?                                                                                Yes           No


Notice to Borrower of Transfer of Mortgage Servicing
23. If the institution has transferred servicing rights, was notice to the borrower
    given at least 15 days prior to the transfer?                                                     Yes           No
24. If the institution has received servicing rights, was notice given the borrower
    within 15 days after the transfer?                                                                Yes           No
25. Do the notices by transferor and transferee include the following information
    as contained in Appendix MS-2:
    a. The effective date of the transfer?                                                            Yes           No
    b. The new servicer’s name, address, and toll-free or collect call telephone
         number of the transferor servicer?                                                           Yes           No



18 (6/10) • RESPA                                                                           Consumer Compliance Handbook
                                               Real Estate Settlement Procedures Act: Examination Checklist



    c. A toll-free or collect call telephone number of the present servicer to
       answer inquiries relating to the transfer?                                         Yes             No
    d. The date on which the present servicer will cease accepting payments
       and the date the new servicer will begin accepting payments relating to
       the transferred loan?                                                              Yes             No
    e. Any information concerning the effect of the transfer on the availability of
       terms of optional insurance and any action the borrower must take to
       maintain coverage?                                                                 Yes             No
    f. A statement that the transfer does not affect the terms or conditions of the
       mortgage, other than terms directly related to its servicing?                      Yes             No
    g. A statement of the borrower’s rights in connection with complaint
       resolution?                                                                        Yes             No


Responding to Borrower Inquiries
26. Have late fees been imposed within 60 days following a transfer of servicing
    or were payments treated as late when received by transferor rather than
    transferee?                                                                           Yes             No
27. Does the institution respond to borrower inquiries relating to servicing of
    RESPA-covered mortgage loans and refinancings as prescribed in Regula-
    tion X?                                                                               Yes             No
    Specifically, does the institution:
    a. Provide a written response acknowledging receipt of a qualified written
        request from a borrower for information relating to the servicing of the loan
        within 20-business days?                                                          Yes             No
    b. If not, has the action requested by the borrower been taken within the
        20-business day period?                                                           Yes             No
    c. Within 60-business days after the receipt of a qualified written request,
        does the institution make appropriate corrections in the account of the
        borrower and provide a written notification of the correction (including in
        the notice the name and the telephone number of a representative of the
        institution who can provide assistance)?                                          Yes             No
        OR
        Provide the borrower with a written explanation:
           i. Stating the reasons the account is correct (including the name and
              telephone number of a representative of the institution who can
              provide assistance)?                                                        Yes             No
              OR
          ii. Explaining why the information requested is unavailable or cannot be
              obtained by the institution (including the name and telephone number
              of a representative of the institution who can provide assistance)?         Yes             No
28. Does the institution provide information regarding an overdue payment to any
    consumer reporting agency during the 60-day period beginning on the date
    the institution received any qualified written request relating to a dispute
    regarding the borrower’s payments?                                                    Yes             No


Escrow Accounts
29. Does the institution perform an escrow analysis at the creation of the escrow
    account?                                                                              Yes             No
30. Is the initial escrow statement given to the borrower at settlement within 45
    days after the escrow account is established?                                         Yes             No
31. For continuing escrow arrangements, is an annual escrow statement
    provided to the borrower at least once every twelve months?                           Yes             No
32. Does the initial escrow statement itemize:



Consumer Compliance Handbook                                                                 RESPA • 19 (6/10)
Real Estate Settlement Procedures Act: Examination Checklist



    a. Amount of monthly mortgage payment?                                                           Yes           No
    b. Portion of the monthly payment being placed in escrow?                                        Yes           No
    c. Charges to be paid from the escrow account during the first 12 months?                        Yes           No
    d. Disbursement date?                                                                            Yes           No
    e. Amount of cushion?                                                                            Yes           No
33. Is the annual escrow statement provided within 30 days of the completion of
    the escrow account computation year?                                                             Yes           No
34. Does the annual escrow statement itemize:
    a. Current mortgage payment and portion going to escrow?                                         Yes           No
    b. Amount of last year’s mortgage payment and portion that went to escrow?                       Yes           No
     c. Total amount paid into the escrow account during the past computation
        year?                                                                                        Yes           No
     d. Total amount paid from the escrow account during the year for taxes,
        insurance premiums, and other charges?                                                       Yes           No
     e. Balance in the escrow account at the end of the period?                                      Yes           No
     f. Explanation of how any surplus is being handled?                                             Yes           No
     g. Explanation of how any shortage or deficiency is to be paid by the
        borrower?                                                                                    Yes           No
    h. If applicable, the reason(s) why the estimated low monthly balance was
        not reached?                                                                                 Yes           No
35. Are monthly escrow payments following settlement no larger than one-twelfth
    of the amount expected to be paid for taxes, insurance premiums, and other
    charges in the following twelve months, plus one-sixth of that amount?                           Yes           No
36. Does the servicer notify the borrower at least annually of any shortage or
    deficiency in the escrow account?                                                                Yes           No
37. Does the institution make payments from the escrow account for taxes,
    insurance premiums and other charges in a timely manner as they become
    due?                                                                                             Yes           No


No Fees for RESPA Disclosures
38. a. Does the financial institution charge a fee specifically for preparing and
       distributing the HUD-1 forms, escrow statements or documents required
       under the Truth in Lending Act?                                                               Yes           No
    b. If a fee is charged for a GFE, is the fee limited to the cost of a credit report?             Yes           No


Purchase of Title Insurance
39. When the financial institution owns the property being sold, does it require
    that title insurance be purchased from a particular company?                                     Yes           No


Payment or Receipt of Referral or Unearned Fees
40. Is institution management aware of the prohibitions against payment or
    receipt of kickbacks and unearned fees?                                                          Yes           No
41. a. Are federally related mortgage loan transactions referred by brokers,
        affiliates, or other parties?                                                                Yes           No
        OR
    b. Does the institution refer services to brokers, affiliates, or other parties?                 Yes           No
42. If fees were paid to the institution or any parties identified, were all fees paid
    to the broker, affiliate, service provider, or other party consistent with all the
    requirements of section 3500.14(g) and for goods or facilities actually
    furnished or services actually performed?                                                        Yes           No




20 (6/10) • RESPA                                                                          Consumer Compliance Handbook

				
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