12 CFR Part 1024 — Real Estate Settlement Procedures Act (Regulation X)

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PART 1024—REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X) Authority: 12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532, 5581. Source: 76 FR 78981, Dec. 20, 2011, unless otherwise noted. Subpart A—General Provisions § 1024.1 Designation. This part, known as Regulation X, is issued by the Bureau of Consumer Financial Protection to implement the Real Estate Settlement Procedures Act of 1974, as amended, 12 U.S.C. 2601 et. seq. § 1024.2 Definitions. (a) Statutory terms. (b) Other terms. Application Balloon payment Bureau Business day Changed circumstances (1)(i) Acts of God, war, disaster, or other emergency; (ii) Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided. This may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; (iii) New information particular to the borrower or transaction that was not relied on in providing the GFE; or (iv) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems. (2) Changed circumstances do not include: (i) The borrower's name, the borrower's monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator prior to providing the GFE, unless the information changes or is found to be inaccurate after the GFE has been provided; or (ii) Market price fluctuations by themselves. Dealer Dealer loan or dealer consumer credit contract Effective date of transfer Federally related mortgage loan (1) Any loan (other than temporary financing, such as a construction loan): (i) That is secured by a first or subordinate lien on residential real property, including a refinancing of any secured loan on residential real property, upon which there is either: (A) Located or, following settlement, will be constructed using proceeds of the loan, a structure or structures designed principally for occupancy of from one to four families (including individual units of condominiums and cooperatives and including any related interests, such as a share in the cooperative or right to occupancy of the unit); or (B) Located or, following settlement, will be placed using proceeds of the loan, a manufactured home; and (ii) For which one of the following paragraphs applies. The loan: (A) Is made in whole or in part by any lender that is either regulated by or whose deposits or accounts are insured by any agency of the Federal Government; (B) Is made in whole or in part, or is insured, guaranteed, supplemented, or assisted in any way: ( 1 ( 2 (C) Is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation (or its successors), or a financial institution from which the loan is to be purchased by the Federal Home Loan Mortgage Corporation (or its successors); (D) Is made in whole or in part by a “creditor,” as defined in section 103(g) of the Consumer Credit Protection Act (15 U.S.C. 1602(g)), that makes or invests in residential real estate loans aggregating more than $1,000,000 per year. For purposes of this definition, the term “creditor” does not include any agency or instrumentality of any State, and the term “residential real estate loan” means any loan secured by residential real property, including single-family and multifamily residential property; (E) Is originated either by a dealer or, if the obligation is to be assigned to any maker of mortgage loans specified in paragraphs (1)(ii)(A) through (D) of this definition, by a mortgage broker; or (F) Is the subject of a home equity conversion mortgage, also frequently called a “reverse mortgage,” issued by any maker of mortgage loans specified in paragraphs (1)(ii)(A) through (D) of this definition. (2) Any installment sales contract, land contract, or contract for deed on otherwise qualifying residential property is a federally related mortgage loan if the contract is funded in whole or in part by proceeds of a loan made by any maker of mortgage loans specified in paragraphs (1)(ii) (A) through (D) of this definition. (3) If the residential real property securing a mortgage loan is not located in a State, the loan is not a federally related mortgage loan. Good faith estimate GFE HUD HUD-1 or HUD-1A settlement statement HUD-1 or HUD-1A Lender Loan originator Manufactured home Mortgage broker Mortgaged property Origination service Person Prepayment penalty Public Guidance Documents Federal Register Federal Register. Refinancing (1) A renewal of a single payment obligation with no change in the original terms; (2) A reduction in the annual percentage rate as computed under the Truth in Lending Act with a corresponding change in the payment schedule; (3) An agreement involving a court proceeding; (4) A workout agreement, in which a change in the payment schedule or change in collateral requirements is agreed to as a result of the consumer's default or delinquency, unless the rate is increased or the new amount financed exceeds the unpaid balance plus earned finance charges and premiums for continuation of allowable insurance; and (5) The renewal of optional insurance purchased by the consumer that is added to an existing transaction, if disclosures relating to the initial purchase were provided. Regulation Z et seq. Required use RESPA et seq. Servicer (1) The Federal Deposit Insurance Corporation (FDIC), in connection with assets acquired, assigned, sold, or transferred pursuant to section 13(c) of the Federal Deposit Insurance Act or as receiver or conservator of an insured depository institution; (2) The National Credit Union Administration (NCUA), in connection with assets acquired, assigned, sold, or transferred pursuant to section 208 of the Federal Credit Union Act or as conservator or liquidating agent of an insured credit union; and (3) The Federal National Mortgage Corporation (FNMA); the Federal Home Loan Mortgage Corporation (Freddie Mac); the FDIC; HUD, including the Government National Mortgage Association (GNMA) and the Federal Housing Administration (FHA) (including cases in which a mortgage insured under the National Housing Act (12 U.S.C. 1701 et seq. Servicing Settlement Settlement service (1) Origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of such loans); (2) Rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender); (3) Provision of any services related to the origination, processing or funding of a federally related mortgage loan; (4) Provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies; (5) Rendering of services by an attorney; (6) Preparation of documents, including notarization, delivery, and recordation; (7) Rendering of credit reports and appraisals; (8) Rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents prior to transfer of title; (9) Conducting of settlement by a settlement agent and any related services; (10) Provision of services involving mortgage insurance; (11) Provision of services involving hazard, flood, or other casualty insurance or homeowner's warranties; (12) Provision of services involving mortgage life, disability, or similar insurance designed to pay a mortgage loan upon disability or death of a borrower, but only if such insurance is required by the lender as a condition of the loan; (13) Provision of services involving real property taxes or any other assessments or charges on the real property; (14) Rendering of services by a real estate agent or real estate broker; and (15) Provision of any other services for which a settlement service provider requires a borrower or seller to pay. Special information booklet Federal Register Federal Register. State Table funding Third party Title company Title service Tolerance [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 10873, Feb. 14, 2013; 88 FR 16542, Mar. 20, 2023] § 1024.3 E-Sign applicability. The disclosures required by this part may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 et seq. [78 FR 10873, Feb. 14, 2013] § 1024.4 Reliance upon rule, regulation, or interpretation by the Bureau. (a) Rule, regulation or interpretation. (i) All provisions, including appendices and supplements, of this part. Any other document referred to in this part is not incorporated in this part unless it is specifically set out in this part; (ii) Any other document that is published in the Federal Register (2) A “rule, regulation, or interpretation thereof by the Bureau” for purposes of section 19(b) of RESPA (12 U.S.C. 2617(b)) shall not include the special information booklet prescribed by the Bureau or any other statement or issuance, whether oral or written, by an officer or representative of the Bureau, letter or memorandum by the Director, General Counsel, or other officer or employee of the Bureau, preamble to a regulation or other issuance of the Bureau, Public Guidance Document, report to Congress, pleading, affidavit or other document in litigation, pamphlet, handbook, guide, telegraphic communication, explanation, instructions to forms, speech or other material of any nature which is not specifically included in paragraph (a)(1) of this section. (b) All informal counsel's opinions and staff interpretations issued by HUD before November 2, 1992, were withdrawn as of that date. Courts and administrative agencies, however, may use previous opinions to determine the validity of conduct under the previous Regulation X. [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 10874, Feb. 14, 2013] § 1024.5 Coverage of RESPA. (a) Applicability. (b) Exemptions. (2) Business purpose loans. (3) Temporary financing. bona fide (4) Vacant land. (5) Assumption without lender approval. (6) Loan conversions. (7) Secondary market transactions. bona fide (c) Relation to State laws. (2) Upon request by any person, the Bureau is authorized to determine if inconsistencies with State law exist; in doing so, the Bureau shall consult with appropriate Federal agencies. (i) The Bureau may not determine that a State law or regulation is inconsistent with any provision of RESPA or this part, if the Bureau determines that such law or regulation gives greater protection to the consumer. (ii) In determining whether provisions of State law or regulations concerning affiliated business arrangements are inconsistent with RESPA or this part, the Bureau may not construe those provisions that impose more stringent limitations on affiliated business arrangements as inconsistent with RESPA so long as they give more protection to consumers and/or competition. (3) Any person may request the Bureau to determine whether an inconsistency exists by submitting to the address established by the Bureau to request an official interpretation, a copy of the State law in question, any other law or judicial or administrative opinion that implements, interprets or applies the relevant provision, and an explanation of the possible inconsistency. A determination by the Bureau that an inconsistency with State law exists will be made by publication of a notice in the Federal Register. (4) A specific preemption of conflicting State laws regarding notices and disclosures of mortgage servicing transfers is set forth in § 1024.33(d). (d) Partial exemptions for certain mortgage loans. (1) That is subject to the special disclosure requirements for certain consumer credit transactions secured by real property set forth in Regulation Z, 12 CFR 1026.19(e), (f), and (g); or (2) That satisfies the criteria in Regulation Z, 12 CFR 1026.3(h). [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 10874, Feb. 14, 2013; 78 FR 44717, July 24, 2013; 78 FR 80104, Dec. 31, 2013; 80 FR 8775, Feb. 19, 2015] Subpart B—Mortgage Settlement and Escrow Accounts § 1024.6 Special information booklet at time of loan application. (a) Lender to provide special information booklet. (1) The lender shall provide the special information booklet by delivering it or placing it in the mail to the applicant not later than three business days (as that term is defined in § 1024.2) after the application is received or prepared. However, if the lender denies the borrower's application for credit before the end of the three-business-day period, then the lender need not provide the booklet to the borrower. If a borrower uses a mortgage broker, the mortgage broker shall distribute the special information booklet and the lender need not do so. The intent of this provision is that the applicant receive the special information booklet at the earliest possible date. (2) In the case of a federally related mortgage loan involving an open-ended credit plan, as defined in Regulation Z, 12 CFR 1026.2(a)(20), a lender or mortgage broker that provides the borrower with a copy of the brochure entitled “When Your Home is On the Line: What You Should Know About Home Equity Lines of Credit”, or any successor brochure issued by the Bureau, is deemed to be in compliance with this section. (3) In the categories of transactions set forth at the end of this paragraph, the lender or mortgage broker does not have to provide the booklet to the borrower. Under the authority of section 19(a) of RESPA (12 U.S.C. 2617(a)), the Bureau may issue a revised or separate special information booklet that deals with these transactions, or the Bureau may choose to endorse the forms or booklets of other Federal agencies. In such an event, the requirements for delivery by lenders and the availability of the booklet or alternate materials for these transactions will be set forth in a Notice in the Federal Register. (i) Refinancing transactions; (ii) Closed-end loans, as defined in 12 CFR 1026.2(a)(10) of Regulation Z, when the lender takes a subordinate lien; (iii) Reverse mortgages; and (iv) Any other federally related mortgage loan whose purpose is not the purchase of a 1- to 4-family residential property. (b) Revision. Federal Register. (c) Reproduction. (d) Permissible changes. Public Guidance Documents (2) The cover of the booklet may be in any form and may contain any drawings, pictures, or artwork, provided that the words “settlement costs” are used in the title. Names, addresses and telephone numbers of the lender or others and similar information may appear on the cover, but no discussion of the matters covered in the booklet shall appear on the cover. (3) The special information booklet may be translated into languages other than English. [76 FR 78981, Dec. 20, 2011, as amended at 81 FR 72370, Oct. 19, 2016] § 1024.7 Good faith estimate. (a) Lender to provide. (2) The lender must provide the GFE to the loan applicant by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, email, or other electronic means. (3) The lender is not required to provide the applicant with a GFE if, before the end of the 3-business-day period: (i) The lender denies the application; or (ii) The applicant withdraws the application. (4) The lender is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The lender may, at its option, charge a fee limited to the cost of a credit report. The lender may not charge additional fees until after the applicant has received the GFE and indicated an intention to proceed with the loan covered by that GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a). (5) The lender may at any time collect from the loan applicant any information that it requires in addition to the required application information. However, the lender is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application. (b) Mortgage broker to provide. (2) The mortgage broker must provide the GFE by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, email, or other electronic means. (3) The mortgage broker is not required to provide the applicant with a GFE if, before the end of the 3-business-day period: (i) The mortgage broker or lender denies the application; or (ii) The applicant withdraws the application. (4) The mortgage broker is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The mortgage broker may, at its option, charge a fee limited to the cost of a credit report. The mortgage broker may not charge additional fees until after the applicant has received the GFE and indicated an intention to proceed with the loan covered by that GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a). (5) The mortgage broker may at any time collect from the loan applicant any information that it requires in addition to the required application information. However, the mortgage broker is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application. (c) Availability of GFE terms. (d) Content and form of GFE. (e) Tolerances for amounts included on GFE. (i) The origination charge; (ii) While the borrower's interest rate is locked, the credit or charge for the interest rate chosen; (iii) While the borrower's interest rate is locked, the adjusted origination charge; and (iv) Transfer taxes. (2) Except as provided in paragraph (f) of this section, the sum of the charges at settlement for the following services may not be greater than 10 percent above the sum of the amounts included on the GFE: (i) Lender-required settlement services, where the lender selects the third party settlement service provider; (ii) Lender-required services, title services and required title insurance, and owner's title insurance, when the borrower uses a settlement service provider identified by the loan originator; and (iii) Government recording charges. (3) The amounts charged for all other settlement services included on the GFE may change at settlement. (f) Binding GFE. (1) Changed circumstances affecting settlement costs. (2) Changed circumstances affecting loan. (3) Borrower-requested changes. (4) Expiration of GFE. (5) Interest rate-dependent charges and terms. (6) New construction home purchases. (g) GFE is not a loan commitment. (h) Open-end lines of credit (home-equity plans) under Truth in Lending Act. (i) Violations of section 5 of RESPA (12 U.S.C. 2604). [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 10875, Feb. 14, 2013] § 1024.8 Use of HUD-1 or HUD-1A settlement statements. (a) Use by settlement agent. (b) Charges to be stated. (1) In general. (2) Use of average charge. (ii) The settlement service provider shall define the particular class of transactions for purposes of calculating the average charge as all transactions involving federally related mortgage loans for: (A) A period of time as determined by the settlement service provider, but not less than 30 calendar days and not more than 6 months; (B) A geographic area as determined by the settlement service provider; and (C) A type of loan as determined by the settlement service provider. (iii) A settlement service provider may use an average charge in the same class of transactions for which the charge was calculated. If the settlement service provider uses the average charge for any transaction in the class, the settlement service provider must use the same average charge in every transaction within that class for which a GFE was provided. (iv) The use of an average charge is not permitted for any settlement service if the charge for the service is based on the loan amount or property value. For example, an average charge may not be used for transfer taxes, interest charges, reserves or escrow, or any type of insurance, including mortgage insurance, title insurance, or hazard insurance. (v) The settlement service provider must retain all documentation used to calculate the average charge for a particular class of transactions for at least 3 years after any settlement for which that average charge was used. (c) Violations of section 4 of RESPA (12 U.S.C. 2603). § 1024.9 Reproduction of settlement statements. (a) Permissible changes—HUD-1. (1) The person reproducing the HUD-1 may insert its business name and logo in section A and may rearrange, but not delete, the other information that appears in section A. (2) The name, address, and other information regarding the lender and settlement agent may be printed in sections F and H, respectively. (3) Reproduction of the HUD-1 must conform to the terminology, sequence, and numbering of line items as presented in lines 100-1400. However, blank lines or items listed in lines 100-1400 that are not used locally or in connection with mortgages by the lender may be deleted, except for the following: Lines 100, 120, 200, 220, 300, 301, 302, 303, 400, 420, 500, 520, 600, 601, 602, 603, 700, 800, 900, 1000, 1100, 1200, 1300, and 1400. The form may be shortened correspondingly. The number of a deleted item shall not be used for a substitute or new item, but the number of a blank space on the HUD-1 may be used for a substitute or new item. (4) Charges not listed on the HUD-1, but that are customary locally or pursuant to the lender's practice, may be inserted in blank spaces. Where existing blank spaces on the HUD-1 are insufficient, additional lines and spaces may be added and numbered in sequence with spaces on the HUD-1. (5) The following variations in layout and format are within the discretion of persons reproducing the HUD-1 and do not require prior Bureau approval: Size of pages; tint or color of pages; size and style of type or print; vertical spacing between lines or provision for additional horizontal space on lines (for example, to provide sufficient space for recording time periods used in prorations); printing of the HUD-1 contents on separate pages, on the front and back of a single page, or on one continuous page; use of multicopy tear-out sets; printing on rolls for computer purposes; reorganization of sections B through I, when necessary to accommodate computer printing; and manner of placement of the HUD number, but not the OMB approval number, neither of which may be deleted. The expiration date associated with the OMB number listed on the form may be deleted. Any changes in the HUD number or OMB approval number may be announced by notice in the Federal Register, (6) The borrower's information and the seller's information may be provided on separate pages. (7) Signature lines may be added. (8) The HUD-1 may be translated into languages other than English. (9) An additional page may be attached to the HUD-1 for the purpose of including customary recitals and information used locally in real estate settlements; for example, breakdown of payoff figures, a breakdown of the borrower's total monthly mortgage payments, check disbursements, a statement indicating receipt of funds, applicable special stipulations between buyer and seller, and the date funds are transferred. If space permits, such information may be added at the end of the HUD-1. (10) As required by HUD/FHA in FHA-insured loans. (11) As allowed by § 1024.17, relating to an initial escrow account statement. (b) Permissible changes—HUD-1A. (c) Written approval. Public Guidance Documents [76 FR 78981, Dec. 20, 2011, as amended at 81 FR 72370, Oct. 19, 2016] § 1024.10 One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping. (a) Inspection one day prior to settlement upon request by the borrower. (b) Delivery. (c) Waiver. (d) Exempt transactions. (e) Recordkeeping. § 1024.11 Mailing. The provisions of this part requiring or permitting mailing of documents shall be deemed to be satisfied by placing the document in the mail (whether or not received by the addressee) addressed to the addresses stated in the loan application or in other information submitted to or obtained by the lender at the time of loan application or submitted or obtained by the lender or settlement agent, except that a revised address shall be used where the lender or settlement agent has been expressly informed in writing of a change in address. § 1024.12 No fee. No fee shall be imposed or charge made upon any other person, as a part of settlement costs or otherwise, by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a manufactured home), or by a servicer (as that term is defined under 12 U.S.C. 2605(i)(2)) for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements required pursuant to section 10 of RESPA (12 U.S.C. 2609), or statements required by the Truth in Lending Act (15 U.S.C. 1601 et seq. § 1024.13 [Reserved] § 1024.14 Prohibition against kickbacks and unearned fees. (a) Section 8 violation. (b) No referral fees. (c) No split of charges except for actual services performed. (d) Thing of value. (e) Agreement or understanding. (f) Referral. (2) A referral also occurs whenever a person paying for a settlement service or business incident thereto is required to use (see § 1024.2, “required use”) a particular provider of a settlement service or business incident thereto. (g) Fees, salaries, compensation, or other payments. (i) A payment to an attorney at law for services actually rendered; (ii) A payment by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance; (iii) A payment by a lender to its duly appointed agent or contractor for services actually performed in the origination, processing, or funding of a loan; (iv) A payment to any person of a bona fide (v) A payment pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and real estate brokers. (The statutory exemption restated in this paragraph refers only to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity, and has no applicability to any fee arrangements between real estate brokers and mortgage brokers or between mortgage brokers.); (vi) Normal promotional and educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident thereto; or (vii) An employer's payment to its own employees for any referral activities. (2) The Bureau may investigate high prices to see if they are the result of a referral fee or a split of a fee. If the payment of a thing of value bears no reasonable relationship to the market value of the goods or services provided, then the excess is not for services or goods actually performed or provided. These facts may be used as evidence of a violation of section 8 and may serve as a basis for a RESPA investigation. High prices standing alone are not proof of a RESPA violation. The value of a referral ( i.e., (3) Multiple services. (h) Recordkeeping. (i) Appendix B of this part. § 1024.15 Affiliated business arrangements. (a) General. (b) Violation and exemption. (1) The person making each referral has provided to each person whose business is referred a written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement set forth in appendix D of this part, of the nature of the relationship (explaining the ownership and financial interest) between the provider of settlement services (or business incident thereto) and the person making the referral and of an estimated charge or range of charges generally made by such provider (which describes the charge using the same terminology, as far as practical, as section L of the HUD-1 settlement statement). The disclosures must be provided on a separate piece of paper no later than the time of each referral or, if the lender requires use of a particular provider, the time of loan application, except that: (i) Where a lender makes the referral to a borrower, the condition contained in paragraph (b)(1) of this section may be satisfied at the time that the good faith estimate or a statement under § 1024.7(d) is provided; and (ii) Whenever an attorney or law firm requires a client to use a particular title insurance agent, the attorney or law firm shall provide the disclosures no later than the time the attorney or law firm is engaged by the client. (iii) Failure to comply with the disclosure requirements of this section may be overcome if the person making a referral can prove by a preponderance of the evidence that procedures reasonably adopted to result in compliance with these conditions have been maintained and that any failure to comply with these conditions was unintentional and the result of a bona fide bona fide (2) No person making a referral has required (as defined in § 1024.2, “required use”) any person to use any particular provider of settlement services or business incident thereto, except if such person is a lender, for requiring a buyer, borrower or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender's interest in a real estate transaction, or except if such person is an attorney or law firm for arranging for issuance of a title insurance policy for a client, directly as agent or through a separate corporate title insurance agency that may be operated as an adjunct to the law practice of the attorney or law firm, as part of representation of that client in a real estate transaction. (3) The only thing of value that is received from the arrangement other than payments listed in § 1024.14(g) is a return on an ownership interest or franchise relationship. (i) In an affiliated business arrangement: (A) Bona fide (B) Bona fide (ii) A return on an ownership interest does not include: (A) Any payment which has as a basis of calculation no apparent business motive other than distinguishing among recipients of payments on the basis of the amount of their actual, estimated or anticipated referrals; (B) Any payment which varies according to the relative amount of referrals by the different recipients of similar payments; or (C) A payment based on an ownership, partnership or joint venture share which has been adjusted on the basis of previous relative referrals by recipients of similar payments. (iii) Neither the mere labeling of a thing of value, nor the fact that it may be calculated pursuant to a corporate or partnership organizational document or a franchise agreement, will determine whether it is a bona fide (iv) A return on franchise relationship may be a payment to or from a franchisee but it does not include any payment which is not based on the franchise agreement, nor any payment which varies according to the number or amount of referrals by the franchisor or franchisee or which is based on a franchise agreement which has been adjusted on the basis of a previous number or amount of referrals by the franchiser or franchisees. A franchise agreement may not be constructed to insulate against kickbacks or referral fees. (c) Definitions. Associate Affiliate relationship Beneficial ownership Control, (i) Is a general partner, officer, director, or employer of another person; (ii) Directly or indirectly or acting in concert with others, or through one or more subsidiaries, owns, holds with power to vote, or holds proxies representing, more than 20 percent of the voting interests of another person; (iii) Affirmatively influences in any manner the election of a majority of the directors of another person; or (iv) Has contributed more than 20 percent of the capital of the other person. Direct ownership Franchise Franchisor Franchisee FTC Person who is in a position to refer settlement service business (d) Recordkeeping. (e) Appendix B of this part. § 1024.16 Title companies. No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608). Section 1024.2 defines “required use” of a provider of a settlement service. § 1024.17 Escrow accounts. (a) General. (b) Definitions. Aggregate (or) composite analysis, aggregate analysis, Annual escrow account statement Cushion or reserve Deficiency Delivery Disbursement date Escrow account Escrow account analysis (1) Determine the appropriate target balances; (2) Compute the borrower's monthly payments for the next escrow account computation year and any deposits needed to establish or maintain the account; and (3) Determine whether shortages, surpluses or deficiencies exist. Escrow account computation year Escrow account item separate item Initial escrow account statement Installment payment Payment due date Penalty Pre-accrual Shortage Single-item analysis Submission Surplus System of recordkeeping Target balance Trial running balance (c) Limits on payments to escrow accounts. (i) Charges at settlement or upon creation of an escrow account. 1/6 (ii) Charges during the life of the escrow account. 1/12 1/6 (2) Escrow analysis at creation of escrow account. (3) Subsequent escrow account analyses. (4) Aggregate accounting required. (5) Cushion. 1/6 (6) Restrictions on pre-accrual. (7) Servicer estimates of disbursement amounts. (8) Provisions in federally related mortgage documents. (9) Assessments for periods longer than one year. (d) Methods of escrow account analysis. (2) Aggregate analysis. (A) The servicer first projects a trial balance for the account as a whole over the next computation year (a trial running balance). In doing so the servicer assumes that it will make estimated disbursements on or before the earlier of the deadline to take advantage of discounts, if available, or the deadline to avoid a penalty. The servicer does not use pre-accrual on these disbursement dates. The servicer also assumes that the borrower will make monthly payments equal to one-twelfth of the estimated total annual escrow account disbursements. (B) The servicer then examines the monthly trial balances and adds to the first monthly balance an amount just sufficient to bring the lowest monthly trial balance to zero, and adjusts all other monthly balances accordingly. (C) The servicer then adds to the monthly balances the permissible cushion. The cushion is two months of the borrower's escrow payments to the servicer or a lesser amount specified by state law or the mortgage document (net of any increases or decreases because of prior year shortages or surpluses, respectively). (ii) Lowest monthly balance. (e) Transfer of servicing. (i) Where a new servicer provides an initial escrow account statement upon the transfer of servicing, the new servicer shall use the effective date of the transfer of servicing to establish the new escrow account computation year. (ii) Where the new servicer retains the monthly payments and accounting method used by the transferor servicer, then the new servicer may continue to use the escrow account computation year established by the transferor servicer or may choose to establish a different computation year using a short-year statement. At the completion of the escrow account computation year or any short year, the new servicer shall perform an escrow analysis and provide the borrower with an annual escrow account statement. (2) The new servicer shall treat shortages, surpluses and deficiencies in the transferred escrow account according to the procedures set forth in § 1024.17(f). (f) Shortages, surpluses, and deficiencies requirements Escrow account analysis. (i) As noted in § 1024.17(c)(2) and (3), the servicer shall conduct an escrow account analysis upon establishing an escrow account and at completion of the escrow account computation year. (ii) The servicer may conduct an escrow account analysis at other times during the escrow computation year. If a servicer advances funds in paying a disbursement, which is not the result of a borrower's payment default under the underlying mortgage document, then the servicer shall conduct an escrow account analysis to determine the extent of the deficiency before seeking repayment of the funds from the borrower under this paragraph (f). (2) Surpluses. (ii) These provisions regarding surpluses apply if the borrower is current at the time of the escrow account analysis. A borrower is current if the servicer receives the borrower's payments within 30 days of the payment due date. If the servicer does not receive the borrower's payment within 30 days of the payment due date, then the servicer may retain the surplus in the escrow account pursuant to the terms of the federally related mortgage loan documents. (iii) After an initial or annual escrow analysis has been performed, the servicer and the borrower may enter into a voluntary agreement for the forthcoming escrow accounting year for the borrower to deposit funds into the escrow account for that year greater than the limits established under paragraph (c) of this section. Such an agreement shall cover only one escrow accounting year, but a new voluntary agreement may be entered into after the next escrow analysis is performed. The voluntary agreement may not alter how surpluses are to be treated when the next escrow analysis is performed at the end of the escrow accounting year covered by the voluntary agreement. (3) Shortages. (A) The servicer may allow a shortage to exist and do nothing to change it; (B) The servicer may require the borrower to repay the shortage amount within 30 days; or (C) The servicer may require the borrower to repay the shortage amount in equal monthly payments over at least a 12-month period. (ii) If an escrow account analysis discloses a shortage that is greater than or equal to one month's escrow account payment, then the servicer has two possible courses of action: (A) The servicer may allow a shortage to exist and do nothing to change it; or (B) The servicer may require the borrower to repay the shortage in equal monthly payments over at least a 12-month period. (4) Deficiency. (i) If the deficiency is less than one month's escrow account payment, then the servicer: (A) May allow the deficiency to exist and do nothing to change it; (B) May require the borrower to repay the deficiency within 30 days; or (C) May require the borrower to repay the deficiency in 2 or more equal monthly payments. (ii) If the deficiency is greater than or equal to 1 month's escrow payment, the servicer may allow the deficiency to exist and do nothing to change it or may require the borrower to repay the deficiency in two or more equal monthly payments. (iii) These provisions regarding deficiencies apply if the borrower is current at the time of the escrow account analysis. A borrower is current if the servicer receives the borrower's payments within 30 days of the payment due date. If the servicer does not receive the borrower's payment within 30 days of the payment due date, then the servicer may recover the deficiency pursuant to the terms of the federally related mortgage loan documents. (5) Notice of shortage or deficiency in escrow account. (g) Initial escrow account statement Submission at settlement, or within 45 calendar days of settlement. (i) The initial escrow account statement shall include the amount of the borrower's monthly mortgage payment and the portion of the monthly payment going into the escrow account and shall itemize the estimated taxes, insurance premiums, and other charges that the servicer reasonably anticipates to be paid from the escrow account during the escrow account computation year and the anticipated disbursement dates of those charges. The initial escrow account statement shall indicate the amount that the servicer selects as a cushion. The statement shall include a trial running balance for the account. (ii) Pursuant to § 1024.17(h)(2), the servicer may incorporate the initial escrow account statement into the HUD-1 or HUD-1A settlement statement. If the servicer does not incorporate the initial escrow account statement into the HUD-1 or HUD-1A settlement statement, then the servicer shall submit the initial escrow account statement to the borrower as a separate document. (2) Time of submission of initial escrow account statement for an escrow account established after settlement. (h) Format for initial escrow account statement. Public Guidance Documents (2) Incorporation of initial escrow account statement into HUD-1 or HUD-1A settlement statement. (3) Identification of payees. etc. e.g., etc. (i) Annual escrow account statements. (1) Contents of annual escrow account statement. (i) The amount of the borrower's current monthly mortgage payment and the portion of the monthly payment going into the escrow account; (ii) The amount of the past year's monthly mortgage payment and the portion of the monthly payment that went into the escrow account; (iii) The total amount paid into the escrow account during the past computation year; (iv) The total amount paid out of the escrow account during the same period for taxes, insurance premiums, and other charges (as separately identified); (v) The balance in the escrow account at the end of the period; (vi) An explanation of how any surplus is being handled by the servicer; (vii) An explanation of how any shortage or deficiency is to be paid by the borrower; and (viii) If applicable, the reason(s) why the estimated low monthly balance was not reached, as indicated by noting differences between the most recent account history and last year's projection. Public Guidance Documents entitled “Annual Escrow Account Disclosure Statement—Format” and “Annual Escrow Account Disclosure Statement—Example” set forth an acceptable format and methodology for conveying this information. (2) No annual statements in the case of default, foreclosure, or bankruptcy. (3) Delivery with other material. (4) Short year statements. (i) Effect of short year statement. (ii) Short year statement upon servicing transfer. (iii) Short year statement upon loan payoff. (j) Formats for annual escrow account statement. (k) Timely payments. (2) The servicer must advance funds to make disbursements in a timely manner as long as the borrower's payment is not more than 30 days overdue. Upon advancing funds to pay a disbursement, the servicer may seek repayment from the borrower for the deficiency pursuant to paragraph (f) of this section. (3) For the payment of property taxes from the escrow account, if a taxing jurisdiction offers a servicer a choice between annual and installment disbursements, the servicer must also comply with this paragraph (k)(3). If the taxing jurisdiction neither offers a discount for disbursements on a lump sum annual basis nor imposes any additional charge or fee for installment disbursements, the servicer must make disbursements on an installment basis. If, however, the taxing jurisdiction offers a discount for disbursements on a lump sum annual basis or imposes any additional charge or fee for installment disbursements, the servicer may, at the servicer's discretion (but is not required by RESPA to), make lump sum annual disbursements in order to take advantage of the discount for the borrower or avoid the additional charge or fee for installments, as long as such method of disbursement complies with paragraphs (k)(1) and (k)(2) of this section. The Bureau encourages, but does not require, the servicer to follow the preference of the borrower, if such preference is known to the servicer. (4) Notwithstanding paragraph (k)(3) of this section, a servicer and borrower may mutually agree, on an individual case basis, to a different disbursement basis (installment or annual) or disbursement date for property taxes from that required under paragraph (k)(3) of this section, so long as the agreement meets the requirements of paragraphs (k)(1) and (k)(2) of this section. The borrower must voluntarily agree; neither loan approval nor any term of the loan may be conditioned on the borrower's agreeing to a different disbursement basis or disbursement date. (5) Timely payment of hazard insurance In general. (ii) Inability to disburse funds When inability exists. (B) When inability does not exist. (C) Recoupment of advances. (iii) Small servicers. (l) Discretionary payments. [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 10875, Feb. 14, 2013; 81 FR 72370, Oct. 19, 2016] §§ 1024.18-1024.19 [Reserved] § 1024.20 List of homeownership counseling organizations. (a) Provision of list. (i) The Web site maintained by the Bureau for lenders to use in complying with the requirements of this section; or (ii) Data made available by the Bureau or HUD for lenders to use in complying with the requirements of this section, provided that the data is used in accordance with instructions provided with the data. (2) The list of homeownership counseling organizations provided under this section may be combined and provided with other mortgage loan disclosures required pursuant to Regulation Z, 12 CFR part 1026, or this part unless prohibited by Regulation Z or this part. (3) A mortgage broker or dealer may provide the list of homeownership counseling organizations required under this section to any loan applicant from whom it receives or for whom it prepares an application. If the mortgage broker or dealer has provided the required list of homeownership counseling organizations, the lender is not required to provide an additional list. The lender is responsible for ensuring that the list of homeownership counseling organizations is provided to a loan applicant in accordance with this section. (4) If the lender, mortgage broker, or dealer does not provide the list of homeownership counseling organizations required under this section to the loan applicant in person, the lender must mail or deliver the list to the loan applicant by other means. The list may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act), 15 U.S.C. 7001 et seq. (5) The lender is not required to provide the list of homeownership counseling organizations required under this section if, before the end of the three-business-day period provided in paragraph (a)(1) of this section, the lender denies the application or the loan applicant withdraws the application. (6) If a mortgage loan transaction involves more than one lender, only one list of homeownership counseling organizations required under this section shall be given to the loan applicant and the lenders shall agree among themselves which lender will comply with the requirements that this section imposes on any or all of them. If there is more than one loan applicant, the required list of homeownership counseling organizations may be provided to any loan applicant with primary liability on the mortgage loan obligation. (b) Open-end lines of credit (home-equity plans) under Regulation Z. (c) Exemptions Reverse mortgage transactions. (2) Timeshare plans. [78 FR 6961, Jan. 31, 2013] Subpart C—Mortgage Servicing Source: 78 FR 10876, Feb. 14, 2013, unless otherwise noted. § 1024.30 Scope. (a) In general. (b) Exemptions. (1) A servicer that qualifies as a small servicer pursuant to 12 CFR 1026.41(e)(4); (2) A servicer with respect to any reverse mortgage transaction as that term is defined in § 1024.31; and (3) A servicer with respect to any mortgage loan for which the servicer is a qualified lender as that term is defined in 12 CFR 617.7000. (c) Scope of certain sections. (2) The procedures set forth in §§ 1024.39 through 1024.41 of this subpart only apply to a mortgage loan that is secured by a property that is a borrower's principal residence. (d) Successors in interest. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 60437, Oct. 1, 2013; 78 FR 80104, Dec. 31, 2013; 81 FR 72370, Oct. 19, 2016] § 1024.31 Definitions. For purposes of this subpart: Confirmed successor in interest Consumer reporting agency Day Delinquency Hazard insurance Loss mitigation application Loss mitigation option Master servicer Mortgage loan Qualified written request (1) States the reasons the borrower believes the account is in error; or (2) Provides sufficient detail to the servicer regarding information relating to the servicing of the mortgage loan sought by the borrower. Reverse mortgage transaction Service provider Subservicer Successor in interest (1) A transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (2) A transfer to a relative resulting from the death of a borrower; (3) A transfer where the spouse or children of the borrower become an owner of the property; (4) A transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; or (5) A transfer into an inter vivos Transferee servicer Transferor servicer [78 FR 10876, Feb. 14, 2013, as amended at 81 FR 72370, Oct. 19, 2016; 86 FR 34899, June 30, 2021; 90 FR 20792, May 16, 2025] § 1024.32 General disclosure requirements. (a) Disclosure requirements Form of disclosures. (2) Foreign language disclosures. (b) Additional information; disclosures required by other laws. et seq. et seq. (c) Successors in interest Optional notice with acknowledgment form. (i) The servicer has confirmed the successor in interest's identity and ownership interest in the property; (ii) Unless the successor in interest assumes the mortgage loan obligation under State law, the successor in interest is not liable for the mortgage debt and cannot be required to use the successor in interest's assets to pay the mortgage debt, except that the lender has a security interest in the property and a right to foreclose on the property, when permitted by law and authorized under the mortgage loan contract; (iii) The successor in interest may be entitled to receive certain notices and communications about the mortgage loan if the servicer is not providing them to another confirmed successor in interest or borrower on the account; (iv) In order to receive such notices and communications, the successor in interest must execute and provide to the servicer an acknowledgment form that: (A) Requests receipt of such notices and communications if the servicer is not providing them to another confirmed successor in interest or borrower on the account; and (B) Indicates that the successor in interest understands that such notices do not make the successor in interest liable for the mortgage debt and that the successor in interest is only liable for the mortgage debt if the successor in interest assumes the mortgage loan obligation under State law; and (C) Informs the successor in interest that there is no time limit to return the acknowledgment but that the servicer will not begin sending such notices and communications to the confirmed successor in interest until the acknowledgment is returned; and (v) Whether or not the successor in interest executes the acknowledgment described in paragraph (c)(1)(iv) of this section, the successor in interest is entitled to submit notices of error under § 1024.35, requests for information under § 1024.36, and requests for a payoff statement under § 1026.36 with respect to the mortgage loan account, with a brief explanation of those rights and how to exercise them, including appropriate address information. (2) Effect of failure to execute acknowledgment. (3) Additional copies of acknowledgment form. (4) Multiple notices unnecessary. [78 FR 10876, Feb. 14, 2013, as amended at 81 FR 72371, Oct. 19, 2016] § 1024.33 Mortgage servicing transfers. (a) Servicing disclosure statement. (b) Notices of transfer of loan servicing Requirement for notice. (2) Certain transfers excluded. (A) A transfer between affiliates; (B) A transfer that results from mergers or acquisitions of servicers or subservicers; (C) A transfer that occurs between master servicers without changing the subservicer; (ii) The Federal Housing Administration (FHA) is not required to provide to the borrower a notice of transfer where a mortgage insured under the National Housing Act is assigned to the FHA. (3) Time of notice In general. (ii) Extended time. (A) Termination of the contract for servicing the loan for cause; (B) Commencement of proceedings for bankruptcy of the servicer; (C) Commencement of proceedings by the FDIC for conservatorship or receivership of the servicer or an entity that owns or controls the servicer; or (D) Commencement of proceedings by the NCUA for appointment of a conservator or liquidating agent of the servicer or an entity that owns or controls the servicer. (iii) Notice provided at settlement. (4) Contents of notice. (i) The effective date of the transfer of servicing; (ii) The name, address, and a collect call or toll-free telephone number for an employee or department of the transferee servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries; (iii) The name, address, and a collect call or toll-free telephone number for an employee or department of the transferor servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries; (iv) The date on which the transferor servicer will cease to accept payments relating to the loan and the date on which the transferee servicer will begin to accept such payments. These dates shall either be the same or consecutive days; (v) Whether the transfer will affect the terms or the continued availability of mortgage life or disability insurance, or any other type of optional insurance, and any action the borrower must take to maintain such coverage; and (vi) A statement that the transfer of servicing does not affect any term or condition of the mortgage loan other than terms directly related to the servicing of the loan. (c) Borrower payments during transfer of servicing Payments not considered late. (2) Treatment of payments. (i) Transfer the payment to the transferee servicer for application to a borrower's mortgage loan account, or (ii) Return the payment to the person that made the payment and notify such person of the proper recipient of the payment. (d) Preemption of State laws. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 80104, Dec. 31, 2013] § 1024.34 Timely escrow payments and treatment of escrow account balances. (a) Timely escrow disbursements required. (b) Refund of escrow balance In general. (2) Servicer may credit funds to a new escrow account. (i) Was also the lender to whom the prior mortgage loan was initially payable; (ii) Is the owner or assignee of the prior mortgage loan; or (iii) Uses the same servicer that serviced the prior mortgage loan to service the new mortgage loan. § 1024.35 Error resolution procedures. (a) Notice of error. (b) Scope of error resolution. (1) Failure to accept a payment that conforms to the servicer's written requirements for the borrower to follow in making payments. (2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law. (3) Failure to credit a payment to a borrower's mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1). (4) Failure to pay taxes, insurance premiums, or other charges, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay, in a timely manner as required by § 1024.34(a), or to refund an escrow account balance as required by § 1024.34(b). (5) Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower. (6) Failure to provide an accurate payoff balance amount upon a borrower's request in violation of section 12 CFR 1026.36(c)(3). (7) Failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by § 1024.39. (8) Failure to transfer accurately and timely information relating to the servicing of a borrower's mortgage loan account to a transferee servicer. (9) Making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process in violation of § 1024.41(f) or (j). (10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 1024.41(g) or (j). (11) Any other error relating to the servicing of a borrower's mortgage loan. (c) Contact information for borrowers to assert errors. (d) Acknowledgment of receipt. (e) Response to notice of error Investigation and response requirements In general. (A) Correcting the error or errors identified by the borrower and providing the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or (B) Conducting a reasonable investigation and providing the borrower with a written notification that includes a statement that the servicer has determined that no error occurred, a statement of the reason or reasons for this determination, a statement of the borrower's right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance. (ii) Different or additional error. (2) Requesting information from borrower. (i) Require a borrower to provide such information as a condition of investigating an asserted error; or (ii) Determine that no error occurred because the borrower failed to provide any requested information without conducting a reasonable investigation pursuant to paragraph (e)(1)(i)(B) of this section. (3) Time limits In general. (A) Not later than seven days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error for errors asserted under paragraph (b)(6) of this section. (B) Prior to the date of a foreclosure sale or within 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error, whichever is earlier, for errors asserted under paragraphs (b)(9) and (10) of this section. (C) For all other asserted errors, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the applicable notice of error. (ii) Extension of time limit. (4) Copies of documentation. (5) Omissions in responses to requests for documentation. (i) The information pertains to a potential or confirmed successor in interest who is not the requester; or (ii) The requester is a confirmed successor in interest and the information pertains to any borrower who is not the requester. (f) Alternative compliance Early correction. (2) Error asserted before foreclosure sale. (g) Requirements not applicable In general. (i) Duplicative notice of error. (ii) Overbroad notice of error. (iii) Untimely notice of error. (A) Servicing for the mortgage loan that is the subject of the asserted error was transferred from the servicer receiving the notice of error to a transferee servicer; or (B) The mortgage loan is discharged. (2) Notice to borrower. (h) Payment requirements prohibited. (i) Effect on servicer remedies Adverse information. (2) Remedies permitted. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 60437, Oct. 1, 2013; 81 FR 72371, Oct. 19, 2016] § 1024.36 Requests for information. (a) Information request. (b) Contact information for borrowers to request information. (c) Acknowledgment of receipt. (d) Response to information request Investigation and response requirements. (i) Providing the borrower with the requested information and contact information, including a telephone number, for further assistance in writing; or (ii) Conducting a reasonable search for the requested information and providing the borrower with a written notification that states that the servicer has determined that the requested information is not available to the servicer, provides the basis for the servicer's determination, and provides contact information, including a telephone number, for further assistance. (2) Time limits In general. (A) Not later than 10 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives an information request for the identity of, and address or other relevant contact information for, the owner or assignee of a mortgage loan; and (B) For all other requests for information, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the information request. (ii) Extension of time limit. (3) Omissions in responses to requests. (i) The information pertains to a potential or confirmed successor in interest who is not the requester; or (ii) The requester is a confirmed successor and the information pertains to any borrower who is not the requester. (e) Alternative compliance. (f) Requirements not applicable In general. (i) Duplicative information. (ii) Confidential, proprietary or privileged information. (iii) Irrelevant information. (iv) Overbroad or unduly burdensome information request. (v) Untimely information request. (A) Servicing for the mortgage loan that is the subject of the information request was transferred from the servicer receiving the request for information to a transferee servicer; or (B) The mortgage loan is discharged. (2) Notice to borrower. (g) Payment requirement limitations Fees prohibited. (2) Fee permitted. (h) Servicer remedies. (i) Potential successors in interest. (2) If a written request under paragraph (i)(1) of this section does not provide sufficient information to enable the servicer to identify the documents the servicer reasonably requires to confirm the person's identity and ownership interest in the property, the servicer may provide a response that includes examples of documents typically accepted to establish identity and ownership interest in a property; indicates that the person may obtain a more individualized description of required documents by providing additional information; specifies what additional information is required to enable the servicer to identify the required documents; and provides contact information, including a telephone number, for further assistance. A servicer's response under this paragraph (i)(2) must otherwise comply with the requirements of paragraph (i)(1). Notwithstanding paragraph (f)(1)(i) of this section, if a potential successor in interest subsequently provides orally or in writing the required information specified by the servicer pursuant to this paragraph (i)(2), the servicer must treat the new information, together with the original request, as a new, non-duplicative request under paragraph (i)(1), received as of the date the required information was received, and must respond accordingly. (3) In responding to a request under paragraph (i)(1) of this section prior to confirmation, the servicer is not required to provide any information other than the information specified in paragraphs (i)(1) and (2) of this section. In responding to a written request under paragraph (i)(1) that requests other information, the servicer must indicate that the potential successor in interest may resubmit any request for information once confirmed as a successor in interest. (4) If a servicer has established an address that a borrower must use to request information pursuant to paragraph (b) of this section, a servicer must comply with the requirements of paragraph (i)(1) of this section only for requests received at the established address. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 60437, Oct. 1, 2013; 81 FR 72371, Oct. 19, 2016] § 1024.37 Force-placed insurance. (a) Definition of force-placed insurance In general. (2) Types of insurance not considered force-placed insurance. (i) Hazard insurance required by the Flood Disaster Protection Act of 1973. (ii) Hazard insurance obtained by a borrower but renewed by the borrower's servicer as described in § 1024.17(k)(1), (2), or (5). (iii) Hazard insurance obtained by a borrower but renewed by the borrower's servicer at its discretion, if the borrower agrees. (b) Basis for charging borrower for force-placed insurance. (c) Requirements before charging borrower for force-placed insurance In general. (i) Deliver to a borrower or place in the mail a written notice containing the information required by paragraph (c)(2) of this section at least 45 days before a servicer assesses on a borrower such charge or fee; (ii) Deliver to the borrower or place in the mail a written notice in accordance with paragraph (d)(1) of this section; and (iii) By the end of the 15-day period beginning on the date the written notice described in paragraph (c)(1)(ii) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has had in place, continuously, hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance. (2) Content of notice. (i) The date of the notice; (ii) The servicer's name and mailing address; (iii) The borrower's name and mailing address; (iv) A statement that requests the borrower to provide hazard insurance information for the borrower's property and identifies the property by its physical address; (v) A statement that: (A) The borrower's hazard insurance is expiring, has expired, or provides insufficient coverage, as applicable; (B) The servicer does not have evidence that the borrower has hazard insurance coverage past the expiration date or evidence that the borrower has hazard insurance that provides sufficient coverage, as applicable; and (C) If applicable, identifies the type of hazard insurance for which the servicer lacks evidence of coverage; (vi) A statement that hazard insurance is required on the borrower's property, and that the servicer has purchased or will purchase, as applicable, such insurance at the borrower's expense; (vii) A statement requesting the borrower to promptly provide the servicer with insurance information; (viii) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing; (ix) A statement that insurance the servicer has purchased or purchases: (A) May cost significantly more than hazard insurance purchased by the borrower; (B) Not provide as much coverage as hazard insurance purchased by the borrower; (x) The servicer's telephone number for borrower inquiries; and (xi) If applicable, a statement advising the borrower to review additional information provided in the same transmittal. (3) Format. (4) Additional information. (d) Reminder notice In general. (2) Content of the reminder notice Servicer receiving no insurance information. (A) The date of the notice; (B) A statement that the notice is the second and final notice; (C) The information required by paragraphs (c)(2)(ii) through (xi) of this section; and (D) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such. (ii) Servicer lacking evidence of continuous coverage. (A) The date of the notice; (B) The information required by paragraphs (c)(2)(ii) through (iv) and (ix) through (xi) and (d)(2)(i)(B) and (D) of this section; (C) A statement that the servicer has received the hazard insurance information that the borrower provided; (D) A statement that requests the borrower to provide the information that is missing; (E) A statement that the borrower will be charged for insurance the servicer has purchased or purchases for the period of time during which the servicer is unable to verify coverage; (3) Format. (4) Additional information. (5) Updating notice with borrower information. (e) Renewing or replacing force-placed insurance In general. (i) Deliver to the borrower or place in the mail a written notice containing the information set forth in paragraph (e)(2) of this section at least 45 days before assessing on a borrower such charge or fee; and (ii) By the end of the 45-day period beginning on the date the written notice required by paragraph (e)(1)(i) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has purchased hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance. (iii) Charging a borrower before end of notice period. (2) Content of renewal notice. (i) The date of the notice; (ii) The servicer's name and mailing address; (iii) The borrower's name and mailing address; (iv) A statement that requests the borrower to update the hazard insurance information for the borrower's property and identifies the borrower's property by its physical address; (v) A statement that the servicer previously purchased insurance on the borrower's property and assessed the cost of the insurance to the borrower because the servicer did not have evidence that the borrower had hazard insurance coverage for the property; (vi) A statement that: (A) The insurance the servicer purchased previously has expired or is expiring, as applicable; and (B) Because hazard insurance is required on the borrower's property, the servicer intends to maintain insurance on the property by renewing or replacing the insurance it previously purchased; (vii) A statement informing the borrower: (A) That insurance the servicer purchases may cost significantly more than hazard insurance purchased by the borrower; (B) That such insurance may not provide as much coverage as hazard insurance purchased by the borrower; and (C) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such. (viii) A statement that if the borrower purchases hazard insurance, the borrower should promptly provide the servicer with insurance information. (ix) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing; (x) The servicer's telephone number for borrower inquiries; and (xi) If applicable, a statement advising a borrower to review additional information provided in the same transmittal. (3) Format. (4) Additional information. (5) Frequency of renewal notices. (f) Mailing the notices. (g) Cancellation of force-placed insurance. (1) Cancel the force-placed insurance the servicer purchased to insure the borrower's property; and (2) Refund to such borrower all force-placed insurance premium charges and related fees paid by such borrower for any period of overlapping insurance coverage and remove from the borrower's account all force-placed insurance charges and related fees for such period that the servicer has assessed to the borrower. (h) Limitations on force-placed insurance charges In general. (2) Bona fide and reasonable charge. (i) Relationship to Flood Disaster Protection Act of 1973. [78 FR 10876, Feb. 14, 2013, as amended at 81 FR 72372, Oct. 19, 2016] § 1024.38 General servicing policies, procedures, and requirements. (a) Reasonable policies and procedures. (b) Objectives Accessing and providing timely and accurate information. (i) Provide accurate and timely disclosures to a borrower as required by this subpart or other applicable law; (ii) Investigate, respond to, and, as appropriate, make corrections in response to complaints asserted by a borrower; (iii) Provide a borrower with accurate and timely information and documents in response to the borrower's requests for information with respect to the borrower's mortgage loan; (iv) Provide owners or assignees of mortgage loans with accurate and current information and documents about all mortgage loans they own; (v) Submit documents or filings required for a foreclosure process, including documents or filings required by a court of competent jurisdiction, that reflect accurate and current information and that comply with applicable law; and (vi)(A) Upon receiving notice of the death of a borrower or of any transfer of the property securing a mortgage loan, promptly facilitate communication with any potential or confirmed successors in interest regarding the property; (B) Upon receiving notice of the existence of a potential successor in interest, promptly determine the documents the servicer reasonably requires to confirm that person's identity and ownership interest in the property and promptly provide to the potential successor in interest a description of those documents and how the person may submit a written request under § 1024.36(i) (including the appropriate address); and (C) Upon the receipt of such documents, promptly make a confirmation determination and promptly notify the person, as applicable, that the servicer has confirmed the person's status, has determined that additional documents are required (and what those documents are), or has determined that the person is not a successor in interest. (2) Properly evaluating loss mitigation applications. (i) Provide accurate information regarding loss mitigation options available to a borrower from the owner or assignee of the borrower's mortgage loan; (ii) Identify with specificity all loss mitigation options for which borrowers may be eligible pursuant to any requirements established by an owner or assignee of the borrower's mortgage loan; (iii) Provide prompt access to all documents and information submitted by a borrower in connection with a loss mitigation option to servicer personnel that are assigned to assist the borrower pursuant to § 1024.40; (iv) Identify documents and information that a borrower is required to submit to complete a loss mitigation application and facilitate compliance with the notice required pursuant to § 1024.41(b)(2)(i)(B); and (v) Properly evaluate a borrower who submits an application for a loss mitigation option for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower's mortgage loan and, where applicable, in accordance with the requirements of § 1024.41. (vi) Promptly identify and obtain documents or information not in the borrower's control that the servicer requires to determine which loss mitigation options, if any, to offer the borrower in accordance with the requirements of § 1024.41(c)(4). (3) Facilitating oversight of, and compliance by, service providers. (i) Provide appropriate servicer personnel with access to accurate and current documents and information reflecting actions performed by service providers; (ii) Facilitate periodic reviews of service providers, including by providing appropriate servicer personnel with documents and information necessary to audit compliance by service providers with the servicer's contractual obligations and applicable law; and (iii) Facilitate the sharing of accurate and current information regarding the status of any evaluation of a borrower's loss mitigation application and the status of any foreclosure proceeding among appropriate servicer personnel, including any personnel assigned to a borrower's mortgage loan account as described in § 1024.40, and appropriate service provider personnel, including service provider personnel responsible for handling foreclosure proceedings. (4) Facilitating transfer of information during servicing transfers. (i) As a transferor servicer, timely transfer all information and documents in the possession or control of the servicer relating to a transferred mortgage loan to a transferee servicer in a form and manner that ensures the accuracy of the information and documents transferred and that enables a transferee servicer to comply with the terms of the transferee servicer's obligations to the owner or assignee of the mortgage loan and applicable law; and (ii) As a transferee servicer, identify necessary documents or information that may not have been transferred by a transferor servicer and obtain such documents from the transferor servicer. (iii) For the purposes of this paragraph (b)(4), transferee servicer means a servicer, including a master servicer or a subservicer, that performs or will perform servicing of a mortgage loan and transferor servicer means a servicer, including a master servicer or a subservicer, that transfers or will transfer the servicing of a mortgage loan. (5) Informing borrowers of the written error resolution and information request procedures. (c) Standard requirements Record retention. (2) Servicing file. (i) A schedule of all transactions credited or debited to the mortgage loan account, including any escrow account as defined in § 1024.17(b) and any suspense account; (ii) A copy of the security instrument that establishes the lien securing the mortgage loan; (iii) Any notes created by servicer personnel reflecting communications with the borrower about the mortgage loan account; (iv) To the extent applicable, a report of the data fields relating to the borrower's mortgage loan account created by the servicer's electronic systems in connection with servicing practices; and (v) Copies of any information or documents provided by the borrower to the servicer in accordance with the procedures set forth in § 1024.35 or § 1024.41. [78 FR 10876, Feb. 14, 2013, as amended at 81 FR 72372, Oct. 19, 2016] § 1024.39 Early intervention requirements for certain borrowers. (a) Live contact. (b) Written notice Notice required. (2) Content of the written notice. (i) A statement encouraging the borrower to contact the servicer; (ii) The telephone number to access servicer personnel assigned pursuant to § 1024.40(a) and the servicer's mailing address; (iii) If applicable, a statement providing a brief description of examples of loss mitigation options that may be available from the servicer; (iv) If applicable, either application instructions or a statement informing the borrower how to obtain more information about loss mitigation options from the servicer; and (v) The Web site to access either the Bureau list or the HUD list of homeownership counselors or counseling organizations, and the HUD toll-free telephone number to access homeownership counselors or counseling organizations. (3) Model clauses. (c) Borrowers in bankruptcy Partial exemption. (i) Is exempt from the requirements of paragraph (a) of this section; (ii) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or if any borrower on the mortgage loan has provided a notification pursuant to the Fair Debt Collection Practices Act (FDCPA) section 805(c) (15 U.S.C. 1692c(c)) with respect to that mortgage loan as referenced in paragraph (d) of this section; and (iii) If the conditions of paragraph (c)(1)(ii) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (c)(1)(iii): (A) If a borrower is delinquent when the borrower becomes a debtor in bankruptcy, a servicer must provide the written notice required by paragraph (b) of this section not later than the 45th day after the borrower files a bankruptcy petition under title 11 of the United States Code. If the borrower is not delinquent when the borrower files a bankruptcy petition, but subsequently becomes delinquent while a debtor in bankruptcy, the servicer must provide the written notice not later than the 45th day of the borrower's delinquency. A servicer must comply with these timing requirements regardless of whether the servicer provided the written notice in the preceding 180-day period. (B) The written notice required by paragraph (b) of this section may not contain a request for payment. (C) A servicer is not required to provide the written notice required by paragraph (b) of this section more than once during a single bankruptcy case. (2) Resuming compliance. (A) The bankruptcy case is dismissed; (B) The bankruptcy case is closed; and (C) The borrower reaffirms personal liability for the mortgage loan. (ii) With respect to a mortgage loan for which the borrower has discharged personal liability pursuant to 11 U.S.C. 727, 1141, 1228, or 1328, a servicer: (A) Is not required to resume compliance with paragraph (a) of this section; and (B) Must resume compliance with paragraph (b) of this section if the borrower has made any partial or periodic payment on the mortgage loan after the commencement of the borrower's bankruptcy case. (d) Fair Debt Collection Practices Act partial exemption. (1) Is exempt from the requirements of paragraph (a) of this section; (2) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or while any borrower on that mortgage loan is a debtor in bankruptcy under title 11 of the United States Code as referenced in paragraph (c) of this section; and (3) If the conditions of paragraph (d)(2) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (d)(3): (i) In addition to the information required pursuant to paragraph (b)(2) of this section, the written notice must include a statement that the servicer may or intends to invoke its specified remedy of foreclosure. Model clause MS-4(D) in appendix MS-4 to this part may be used to comply with this requirement. (ii) The written notice may not contain a request for payment. (iii) A servicer is prohibited from providing the written notice more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 60437, Oct. 1, 2013; 78 FR 63004, Oct. 23, 2013; 81 FR 72373, Oct. 19, 2016; 82 FR 47957, Oct. 16, 2017; 86 FR 34899, June 30, 2021; 90 FR 20792, May 16, 2025] § 1024.40 Continuity of contact. (a) In general. (1) Assign personnel to a delinquent borrower by the time the servicer provides the borrower with the written notice required by § 1024.39(b), but in any event, not later than the 45th day of the borrower's delinquency. (2) Make available to a delinquent borrower, via telephone, personnel assigned to the borrower as described in paragraph (a)(1) of this section to respond to the borrower's inquiries, and as applicable, assist the borrower with available loss mitigation options until the borrower has made, without incurring a late charge, two consecutive mortgage payments in accordance with the terms of a permanent loss mitigation agreement. (3) If a borrower contacts the personnel assigned to the borrower as described in paragraph (a)(1) of this section and does not immediately receive a live response from such personnel, ensure that the servicer can provide a live response in a timely manner. (b) Functions of servicer personnel. (1) Provide the borrower with accurate information about: (i) Loss mitigation options available to the borrower from the owner or assignee of the borrower's mortgage loan; (ii) Actions the borrower must take to be evaluated for such loss mitigation options, including actions the borrower must take to submit a complete loss mitigation application, as defined in § 1024.41, and, if applicable, actions the borrower must take to appeal the servicer's determination to deny a borrower's loss mitigation application for any trial or permanent loan modification program offered by the servicer; (iii) The status of any loss mitigation application that the borrower has submitted to the servicer; (iv) The circumstances under which the servicer may make a referral to foreclosure; and (v) Applicable loss mitigation deadlines established by an owner or assignee of the borrower's mortgage loan or § 1024.41. (2) Retrieve, in a timely manner: (i) A complete record of the borrower's payment history; and (ii) All written information the borrower has provided to the servicer, and if applicable, to prior servicers, in connection with a loss mitigation application; (3) Provide the documents and information identified in paragraph (b)(2) of this section to other persons required to evaluate a borrower for loss mitigation options made available by the servicer, if applicable; and (4) Provide a delinquent borrower with information about the procedures for submitting a notice of error pursuant to § 1024.35 or an information request pursuant to § 1024.36. § 1024.41 Loss mitigation procedures. (a) Enforcement and limitations. (b) Receipt of a loss mitigation application Complete loss mitigation application. (2) Review of loss mitigation application submission Requirements. (A) Promptly upon receipt of a loss mitigation application, review the loss mitigation application to determine if the loss mitigation application is complete; and (B) Notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss mitigation application that the servicer acknowledges receipt of the loss mitigation application and that the servicer has determined that the loss mitigation application is either complete or incomplete. If a loss mitigation application is incomplete, the notice shall state the additional documents and information the borrower must submit to make the loss mitigation application complete and the applicable date pursuant to paragraph (b)(2)(ii) of this section. The notice to the borrower shall include a statement that the borrower should consider contacting servicers of any other mortgage loans secured by the same property to discuss available loss mitigation options. (ii) Time period disclosure. (3) Determining protections. (c) Evaluation of loss mitigation applications Complete loss mitigation application. (i) Evaluate the borrower for all loss mitigation options available to the borrower; and (ii) Provide the borrower with a notice in writing stating the servicer's determination of which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage. The servicer shall include in this notice the amount of time the borrower has to accept or reject an offer of a loss mitigation program as provided for in paragraph (e) of this section, if applicable, and a notification, if applicable, that the borrower has the right to appeal the denial of any loan modification option as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section. (2) Incomplete loss mitigation application evaluation In general. (ii) Reasonable time. (iii) Short-term loss mitigation options. (iv) Facially complete application. (v) Certain COVID-19-related loss mitigation options. ( 1 1 1 ( 2 1 ( 3 (B) Once the borrower accepts an offer made pursuant to paragraph (c)(2)(v)(A) of this section, the servicer is not required to comply with paragraph (b)(1) or (2) of this section with regard to any loss mitigation application the borrower submitted prior to the servicer's offer of the loss mitigation option described in paragraph (c)(2)(v)(A) of this section. (3) Notice of complete application. (A) That the loss mitigation application is complete; (B) The date the servicer received the complete application; (C) That the servicer expects to complete its evaluation within 30 days of the date it received the complete application; (D) That the borrower is entitled to certain foreclosure protections because the servicer has received the complete application, and, as applicable, either: ( 1 ( 2 (E) That the servicer may need additional information at a later date to evaluate the application, in which case the servicer will request that information from the borrower and give the borrower a reasonable opportunity to submit it, the evaluation process may take longer, and the foreclosure protections could end if the servicer does not receive the information as requested; and (F) That the borrower may be entitled to additional protections under State or Federal law. (ii) A servicer is not required to provide a notice pursuant to paragraph (c)(3)(i) of this section if: (A) The servicer has already provided the borrower a notice under paragraph (b)(2)(i)(B) of this section informing the borrower that the application is complete and the servicer has not subsequently requested additional information or a corrected version of a previously submitted document from the borrower pursuant to paragraph (c)(2)(iv) of this section; (B) The application was not complete or facially complete more than 37 days before a foreclosure sale; or (C) The servicer has already provided the borrower a notice regarding the application under paragraph (c)(1)(ii) of this section. (4) Information not in the borrower's control Reasonable diligence. (ii) Effect in case of delay. 1 2 ( 2 (B) If a servicer is unable to make a determination within the 30-day period identified in paragraph (c)(1) of this section as to which loss mitigation options, if any, it will offer to the borrower because the servicer lacks required documents or information from a party other than the borrower or the servicer, the servicer must, within such 30-day period or promptly thereafter, provide the borrower a written notice, informing the borrower: ( 1 ( 2 ( 3 ( 4 (C) If a servicer must provide a notice required by paragraph (c)(4)(ii)(B) of this section, the servicer must not provide the borrower a written notice pursuant to paragraph (c)(1)(ii) of this section until the servicer receives the required documents or information referenced in paragraph (c)(4)(ii)(B)( 2 2 (d) Denial of loan modification options. (e) Borrower response In general. (2) Rejection In general. (ii) Trial Loan Modification Plan. (iii) Interaction with appeal process. (f) Prohibition on foreclosure referral Pre-foreclosure review period. (i) A borrower's mortgage loan obligation is more than 120 days delinquent; (ii) The foreclosure is based on a borrower's violation of a due-on-sale clause; or (iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder. (2) Application received before foreclosure referral. (i) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower's appeal has been denied; (ii) The borrower rejects all loss mitigation options offered by the servicer; or (iii) The borrower fails to perform under an agreement on a loss mitigation option. (g) Prohibition on foreclosure sale. (1) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower's appeal has been denied; (2) The borrower rejects all loss mitigation options offered by the servicer; or (3) The borrower fails to perform under an agreement on a loss mitigation option. (h) Appeal process Appeal process required for loan modification denials. (2) Deadlines. (3) Independent evaluation. (4) Appeal determination. (i) Duplicative requests. (j) Small servicer requirements. (k) Servicing transfers In general Timing of compliance. (ii) Transfer date defined. (2) Acknowledgment notices Transferee servicer timeframes. (ii) Prohibitions. (A) Shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process until a date that is after the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section, notwithstanding paragraph (f)(1) of this section. For purposes of paragraph (f)(2) of this section, a borrower who submits a complete loss mitigation application on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section shall be treated as having done so during the pre-foreclosure review period set forth in paragraph (f)(1) of this section. (B) Shall comply with paragraphs (c), (d), and (g) of this section if the borrower submits a complete loss mitigation application to the transferee or transferor servicer 37 or fewer days before the foreclosure sale but on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section. (3) Complete loss mitigation applications pending at transfer. (4) Applications subject to appeal process. (i) Determining appeal. (ii) Servicer unable to determine appeal. (5) Pending loss mitigation offers. [78 FR 10876, Feb. 14, 2013, as amended at 78 FR 60437, Oct. 1, 2013; 81 FR 72373, Oct. 19, 2016; 85 FR 39065, June 30, 2020; 86 FR 34899, June 30, 2021; 90 FR 20792, May 16, 2025] Appendix A to Part 1024—Instructions for Completing HUD-1 and HUD-1a Settlement Statements; Sample HUD-1 and HUD-1a Statements The following are instructions for completing the HUD-1 settlement statement, required under section 4 of RESPA and 12 CFR part 1024 (Regulation X) of the Bureau of Consumer Financial Protection (Bureau) regulations. This form is to be used as a statement of actual charges and adjustments paid by the borrower and the seller, to be given to the parties in connection with the settlement. The instructions for completion of the HUD-1 are primarily for the benefit of the settlement agents who prepare the statements and need not be transmitted to the parties as an integral part of the HUD-1. There is no objection to the use of the HUD-1 in transactions in which its use is not legally required. Refer to the definitions section of the regulations (12 CFR 1024.2) for specific definitions of many of the terms that are used in these instructions. General Instructions Information and amounts may be filled in by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Refer to the Bureau's regulations (Regulation X) regarding rules applicable to reproduction of the HUD-1 for the purpose of including customary recitals and information used locally in settlements; for example, a breakdown of payoff figures, a breakdown of the Borrower's total monthly mortgage payments, check disbursements, a statement indicating receipt of funds, applicable special stipulations between Borrower and Seller, and the date funds are transferred. The settlement agent shall complete the HUD-1 to itemize all charges imposed upon the Borrower and the Seller by the loan originator and all sales commissions, whether to be paid at settlement or outside of settlement, and any other charges which either the Borrower or the Seller will pay at settlement. Charges for loan origination and title services should not be itemized except as provided in these instructions. For each separately identified settlement service in connection with the transaction, the name of the person ultimately receiving the payment must be shown together with the total amount paid to such person. Items paid to and retained by a loan originator are disclosed as required in the instructions for lines in the 800-series of the HUD-1 (and for per diem interest, in the 900-series of the HUD-1). As a general rule, charges that are paid for by the seller must be shown in the seller's column on page 2 of the HUD-1 (unless paid outside closing), and charges that are paid for by the borrower must be shown in the borrower's column (unless paid outside closing). However, in order to promote comparability between the charges on the GFE and the charges on the HUD-1, if a seller pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD-1. That charge should also be offset by listing a credit in that amount to the borrower on lines 204-209 on page 1 of the HUD-1, and by a charge to the seller in lines 506-509 on page 1 of the HUD-1. If a loan originator (other than for no-cost loans), real estate agent, other settlement service provider, or other person pays for a charge that was included on the GFE, the charge should be listed in the borrower's column on page 2 of the HUD-1, with an offsetting credit reported on page 1 of the HUD-1, identifying the party paying the charge. Charges paid outside of settlement by the borrower, seller, loan originator, real estate agent, or any other person, must be included on the HUD-1 but marked “P.O.C.” for “Paid Outside of Closing” (settlement) and must not be included in computing totals. However, indirect payments from a lender to a mortgage broker may not be disclosed as P.O.C., and must be included as a credit on Line 802. P.O.C. items must not be placed in the Borrower or Seller columns, but rather on the appropriate line outside the columns. The settlement agent must indicate whether P.O.C. items are paid for by the Borrower, Seller, or some other party by marking the items paid for by whoever made the payment as “P.O.C.” with the party making the payment identified in parentheses, such as “P.O.C. (borrower)” or “P.O.C. (seller)”. In the case of “no cost” loans where “no cost” encompasses third party fees as well as the upfront payment to the loan originator, the third party services covered by the “no cost” provisions must be itemized and listed in the borrower's column on the HUD-1/1A with the charge for the third party service. These itemized charges must be offset with a negative adjusted origination charge on Line 803 and recorded in the columns. Blank lines are provided in section L for any additional settlement charges. Blank lines are also provided for additional insertions in sections J and K. The names of the recipients of the settlement charges in section L and the names of the recipients of adjustments described in section J or K should be included on the blank lines. Lines and columns in section J which relate to the Borrower's transaction may be left blank on the copy of the HUD-1 which will be furnished to the Seller. Lines and columns in section K which relate to the Seller's transaction may be left blank on the copy of the HUD-1 which will be furnished to the Borrower. Line Item Instructions Instructions for completing the individual items on the HUD-1 follow. Section A. Section B. Section C. Sections D and E. Section F. Section G. Section H. Section I. Section J. Summary of Borrower's Transaction. Line 102 is for the sales price of any items of tangible personal property excluded from Line 101. Personal property could include such items as carpets, drapes, stoves, refrigerators, etc. Line 103 is used to record the total charges to Borrower detailed in section L and totaled on Line 1400. Lines 104 and 105 are for additional amounts owed by the Borrower, such as charges that were not listed on the GFE or items paid by the Seller prior to settlement but reimbursed by the Borrower at settlement. For example, the balance in the Seller's reserve account held in connection with an existing loan, if assigned to the Borrower in a loan assumption case, will be entered here. These lines will also be used when a tenant in the property being sold has not yet paid the rent, which the Borrower will collect, for a period of time prior to the settlement. The lines will also be used to indicate the treatment for any tenant security deposit. The Seller will be credited on Lines 404-405. Lines 106 through 112 are for items which the Seller had paid in advance, and for which the Borrower must therefore reimburse the Seller. Examples of items for which adjustments will be made may include taxes and assessments paid in advance for an entire year or other period, when settlement occurs prior to the expiration of the year or other period for which they were paid. Additional examples include flood and hazard insurance premiums, if the Borrower is being substituted as an insured under the same policy; mortgage insurance in loan assumption cases; planned unit development or condominium association assessments paid in advance; fuel or other supplies on hand, purchased by the Seller, which the Borrower will use when Borrower takes possession of the property; and ground rent paid in advance. Line 120 is for the total of Lines 101 through 112. Line 201 is for any amount paid against the sales price prior to settlement. Line 202 is for the amount of the new loan made by the Lender when a loan to finance construction of a new structure constructed for sale is used as or converted to a loan to finance purchase. Line 202 should also be used for the amount of the first user loan, when a loan to purchase a manufactured home for resale is converted to a loan to finance purchase by the first user. For other loans covered by 12 CFR part 1024 (Regulation X) which finance construction of a new structure or purchase of a manufactured home, list the sales price of the land on Line 104, the construction cost or purchase price of manufactured home on Line 105 (Line 101 would be left blank in this instance) and amount of the loan on Line 202. The remainder of the form should be completed taking into account adjustments and charges related to the temporary financing and permanent financing and which are known at the date of settlement. For reverse mortgage transactions, the amount disclosed on Line 202 is the initial principal limit. Line 203 is used for cases in which the Borrower is assuming or taking title subject to an existing loan or lien on the property. Lines 204-209 are used for other items paid by or on behalf of the Borrower. Lines 204-209 should be used to indicate any financing arrangements or other new loan not listed in Line 202. For example, if the Borrower is using a second mortgage or note to finance part of the purchase price, whether from the same lender, another lender or the Seller, insert the principal amount of the loan with a brief explanation on Lines 204-209. Lines 204-209 should also be used where the Borrower receives a credit from the Seller for closing costs, including seller-paid GFE charges. They may also be used in cases in which a Seller (typically a builder) is making an “allowance” to the Borrower for items that the Borrower is to purchase separately. For reverse mortgages, the amount of any initial draw at settlement is disclosed on Line 204. Lines 210 through 219 are for items which have not yet been paid, and which the Borrower is expected to pay, but which are attributable in part to a period of time prior to the settlement. In jurisdictions in which taxes are paid late in the tax year, most cases will show the proration of taxes in these lines. Other examples include utilities used but not paid for by the Seller, rent collected in advance by the Seller from a tenant for a period extending beyond the settlement date, and interest on loan assumptions. Line 220 is for the total of Lines 201 through 219. Lines 301 and 302 are summary lines for the Borrower. Enter total in Line 120 on Line 301. Enter total in Line 220 on Line 302. Line 303 must indicate either the cash required from the Borrower at settlement (the usual case in a purchase transaction), or cash payable to the Borrower at settlement (if, for example, the Borrower's earnest money exceeds the Borrower's cash obligations in the transaction or there is a cash-out refinance). Subtract Line 302 from Line 301 and enter the amount of cash due to or from the Borrower at settlement on Line 303. The appropriate box should be checked. If the Borrower's earnest money is applied toward the charge for a settlement service, the amount so applied should not be included on Line 303 but instead should be shown on the appropriate line for the settlement service, marked “P.O.C. (Borrower)”, and must not be included in computing totals. Section K. Summary of Seller's Transaction. Line 501 is used if the Seller's real estate broker or other party who is not the settlement agent has received and holds a deposit against the sales price (earnest money) which exceeds the fee or commission owed to that party. If that party will render the excess deposit directly to the Seller, rather than through the settlement agent, the amount of excess deposit should be entered on Line 501 and the amount of the total deposit (including commissions) should be entered on Line 201. Line 502 is used to record the total charges to the Seller detailed in section L and totaled on Line 1400. Line 503 is used if the Borrower is assuming or taking title subject to existing liens which are to be deducted from sales price. Lines 504 and 505 are used for the amounts (including any accrued interest) of any first and/or second loans which will be paid as part of the settlement. Line 506 is used for deposits paid by the Borrower to the Seller or other party who is not the settlement agent. Enter the amount of the deposit in Line 201 on Line 506 unless Line 501 is used or the party who is not the settlement agent transfers all or part of the deposit to the settlement agent, in which case the settlement agent will note in parentheses on Line 507 the amount of the deposit that is being disbursed as proceeds and enter in the column for Line 506 the amount retained by the above-described party for settlement services. If the settlement agent holds the deposit, insert a note in Line 507 which indicates that the deposit is being disbursed as proceeds. Lines 506 through 509 may be used to list additional liens which must be paid off through the settlement to clear title to the property. Other Seller obligations should be shown on Lines 506-509, including charges that were disclosed on the GFE but that are actually being paid for by the Seller. These Lines may also be used to indicate funds to be held by the settlement agent for the payment of either repairs, or water, fuel, or other utility bills that cannot be prorated between the parties at settlement because the amounts used by the Seller prior to settlement are not yet known. Subsequent disclosure of the actual amount of these post-settlement items to be paid from settlement funds is optional. Any amounts entered on Lines 204-209 including Seller financing arrangements should also be entered on Lines 506-509. Instructions for the use of Lines 510 through 519 are the same as those for Lines 210 to 219 above. Line 520 is for the total of Lines 501 through 519. Lines 601 and 602 are summary lines for the Seller. Enter the total in Line 420 on Line 601. Enter the total in Line 520 on Line 602. Line 603 must indicate either the cash required to be paid to the Seller at settlement (the usual case in a purchase transaction), or the cash payable by the Seller at settlement. Subtract Line 602 from Line 601 and enter the amount of cash due to or from the Seller at settlement on Line 603. The appropriate box should be checked. Section L. Settlement Charges. Line 700 is used to enter the sales commission charged by the sales agent or real estate broker. Lines 701-702 are to be used to state the split of the commission where the settlement agent disburses portions of the commission to two or more sales agents or real estate brokers. Line 703 is used to enter the amount of sales commission disbursed at settlement. If the sales agent or real estate broker is retaining a part of the deposit against the sales price (earnest money) to apply towards the sales agent's or real estate broker's commission, include in Line 703 only that part of the commission being disbursed at settlement and insert a note on Line 704 indicating the amount the sales agent or real estate broker is retaining as a “P.O.C.” item. Line 704 may be used for additional charges made by the sales agent or real estate broker, or for a sales commission charged to the Borrower, which will be disbursed by the settlement agent. Line 801 is used to record “Our origination charge,” which includes all charges received by the loan originator, except any charge for the specific interest rate chosen (points). This number must not be listed in either the buyer's or seller's column. The amount shown in Line 801 must include any amounts received for origination services, including administrative and processing services, performed by or on behalf of the loan originator. Line 802 is used to record “Your credit or charge (points) for the specific interest rate chosen,” which states the charge or credit adjustment as applied to “Our origination charge,” if applicable. This number must not be listed in either column or shown on page one of the HUD-1. For a mortgage broker originating a loan in its own name, the amount shown on Line 802 will be the difference between the initial loan amount and the total payment to the mortgage broker from the lender. The total payment to the mortgage broker will be the sum of the price paid for the loan by the lender and any other payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments. For a mortgage broker originating a loan in another entity's name, the amount shown on Line 802 will be the sum of all payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments. In either case, when the amount paid to the mortgage broker exceeds the initial loan amount, there is a credit to the borrower and it is entered as a negative amount. When the initial loan amount exceeds the amount paid to the mortgage broker, there is a charge to the borrower and it is entered as a positive amount. For a lender, the amount shown on Line 802 may include any credit or charge (points) to the Borrower. Line 803 is used to record “Your adjusted origination charges,” which states the net amount of the loan origination charges, the sum of the amounts shown in Lines 801 and 802. This amount must be listed in the columns as either a positive number (for example, where the origination charge shown in Line 801 exceeds any credit for the interest rate shown in Line 802 or where there is an origination charge in Line 801 and a charge for the interest rate (points) is shown on Line 802) or as a negative number (for example, where the credit for the interest rate shown in Line 802 exceeds the origination charges shown in Line 801). In the case of “no cost” loans, where “no cost” refers only to the loan originator's fees, the amounts shown in Lines 801 and 802 should offset, so that the charge shown on Line 803 is zero. Where “no cost” includes third party settlement services, the credit shown in Line 802 will more than offset the amount shown in Line 801. The amount shown in Line 803 will be a negative number to offset the settlement charges paid indirectly through the loan originator. Lines 804-808 may be used to record each of the “Required services that we select.” Each settlement service provider must be identified by name and the amount paid recorded either inside the columns or as paid to the provider outside closing (“P.O.C.”), as described in the General Instructions. Line 804 is used to record the appraisal fee. Line 805 is used to record the fee for all credit reports. Line 806 is used to record the fee for any tax service. Line 807 is used to record any flood certification fee. Lines 808 and additional sequentially numbered lines, as needed, are used to record other third party services required by the loan originator. These Lines may also be used to record other required disclosures from the loan originator. Any such disclosures must be listed outside the columns. Lines 901-904. This series is used to record the items which the Lender requires to be paid at the time of settlement, but which are not necessarily paid to the lender ( e.g., Line 901 is used if interest is collected at settlement for a part of a month or other period between settlement and the date from which interest will be collected with the first regular monthly payment. Enter that amount here and include the per diem charges. If such interest is not collected until the first regular monthly payment, no entry should be made on Line 901. Line 902 is used for mortgage insurance premiums due and payable at settlement, including any monthly amounts due at settlement and any upfront mortgage insurance premium, but not including any reserves collected by the Lender and recorded in the 1000-series. If a lump sum mortgage insurance premium paid at settlement is included on Line 902, a note should indicate that the premium is for the life of the loan. Line 903 is used for homeowner's insurance premiums that the Lender requires to be paid at the time of settlement, except reserves collected by the Lender and recorded in the 1000-series. Lines 904 and additional sequentially numbered lines are used to list additional items required by the Lender (except for reserves collected by the Lender and recorded in the 1000-series), including premiums for flood or other insurance. These lines are also used to list amounts paid at settlement for insurance not required by the Lender. Lines 1000-1007. This series is used for amounts collected by the Lender from the Borrower and held in an account for the future payment of the obligations listed as they fall due. Include the time period (number of months) and the monthly assessment. In many jurisdictions this is referred to as an “escrow”, “impound”, or “trust” account. In addition to the property taxes and insurance listed, some Lenders may require reserves for flood insurance, condominium owners' association assessments, etc. After itemizing individual deposits in the 1000 series, the servicer shall make an adjustment based on aggregate accounting. This adjustment equals the difference between the deposit required under aggregate accounting and the sum of the itemized deposits. The computation steps for aggregate accounting are set out in 12 CFR 1024.17(d). The adjustment will always be a negative number or zero (-0-), except for amounts due to rounding. The settlement agent shall enter the aggregate adjustment amount outside the columns on a final line of the 1000 series of the HUD-1 or HUD-1A statement. Appendix E to this part sets out an example of aggregate analysis. Lines 1100-1108. This series covers title charges and charges by attorneys and closing or settlement agents. The title charges include a variety of services performed by title companies or others, and include fees directly related to the transfer of title (title examination, title search, document preparation), fees for title insurance, and fees for conducting the closing. The legal charges include fees for attorneys representing the lender, seller, or borrower, and any attorney preparing title work. The series also includes any settlement, notary, and delivery fees related to the services covered in this series. Disbursements to third parties must be broken out in the appropriate lines or in blank lines in the series, and amounts paid to these third parties must be shown outside of the columns if included in Line 1101. Charges not included in Line 1101 must be listed in the columns. Line 1101 is used to record the total for the category of “Title services and lender's title insurance.” This amount must be listed in the columns. Line 1102 is used to record the settlement or closing fee. Line 1103 is used to record the charges for the owner's title insurance and related endorsements. This amount must be listed in the columns. Line 1104 is used to record the lender's title insurance premium and related endorsements. Line 1105 is used to record the amount of the lender's title policy limit. This amount is recorded outside of the columns. Line 1106 is used to record the amount of the owner's title policy limit. This amount is recorded outside of the columns. Line 1107 is used to record the amount of the total title insurance premium, including endorsements, that is retained by the title agent. This amount is recorded outside of the columns. Line 1108 used to record the amount of the total title insurance premium, including endorsements, that is retained by the title underwriter. This amount is recorded outside of the columns. Additional sequentially numbered lines in the 1100-series may be used to itemize title charges paid to other third parties, as identified by name and type of service provided. Lines 1200-1206. This series covers government recording and transfer charges. Charges paid by the borrower must be listed in the columns as described for lines 1201 and 1203, with itemizations shown outside the columns. Any amounts that are charged to the seller and that were not included on the Good Faith Estimate must be listed in the columns. Line 1201 is used to record the total “Government recording charges,” and the amount must be listed in the columns. Line 1202 is used to record, outside of the columns, the itemized recording charges. Line 1203 is used to record the transfer taxes, and the amount must be listed in the columns. Line 1204 is used to record, outside of the columns, the amounts for local transfer taxes and stamps. Line 1205 is used to record, outside of the columns, the amounts for state transfer taxes and stamps. Line 1206 and additional sequentially numbered lines may be used to record specific itemized third party charges for government recording and transfer services, but the amounts must be listed outside the columns. Line 1301 and additional sequentially numbered lines must be used to record required services that the borrower can shop for, such as fees for survey, pest inspection, or other similar inspections. These lines may also be used to record additional itemized settlement charges that are not included in a specific category, such as fees for structural and environmental inspections; pre-sale inspections of heating, plumbing or electrical equipment; or insurance or warranty coverage. The amounts must be listed in either the borrower's or seller's column. Line 1400 must state the total settlement charges as calculated by adding the amounts within each column. Page 3 Comparison of Good Faith Estimate (GFE) and HUD-1/1A Charges The HUD-1/1-A is a statement of actual charges and adjustments. The comparison chart on page 3 of the HUD-1 must be prepared using the exact information and amounts for the services that were purchased or provided as part of the transaction, as that information and those amounts are shown on the GFE and in the HUD-1. If a service that was listed on the GFE was not obtained in connection with the transaction, pages 1 and 2 of the HUD-1 should not include any amount for that service, and the estimate on the GFE of the charge for the service should not be included in any amounts shown on the comparison chart on Page 3 of the HUD-1. The comparison chart is comprised of three sections: “Charges That Cannot Increase,” “Charges That Cannot Increase More Than 10%,” and “Charges That Can Change”. “Charges That Cannot Increase.” The amounts shown in Blocks 1 and 2, in Line A, and in Block 8 on the borrower's GFE must be entered in the appropriate line in the Good Faith Estimate column. The amounts shown on Lines 801, 802, 803 and 1203 of the HUD-1/1A must be entered in the corresponding line in the HUD-1/1A column. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. If there is a credit in Block 2 of the GFE or Line 802 of the HUD-1/1A, the credit should be entered as a negative number. “Charges That Cannot Increase More Than 10%.” A description of each charge included in Blocks 3 and 7 on the borrower's GFE must be entered on separate lines in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. For each charge included in Blocks 4, 5 and 6 on the borrower's GFE for which the loan originator selected the provider or for which the borrower selected a provider identified by the loan originator, a description must be entered on a separate line in this section, with the amount shown on the borrower's GFE for each charge entered in the corresponding line in the Good Faith Estimate column. The loan originator must identify any third party settlement services for which the borrower selected a provider other than one identified by the loan originator so that the settlement agent can include those charges in the appropriate category. Additional lines may be added if necessary. The amounts shown on the HUD-1/1A for each line must be entered in the HUD-1/1A column next to the corresponding charge from the GFE, along with the appropriate HUD-1/1A line number. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. The amounts shown in the Good Faith Estimate and HUD-1/1A columns for this section must be separately totaled and entered in the designated line. If the total for the HUD-1/1A column is greater than the total for the Good Faith Estimate column, then the amount of the increase must be entered both as a dollar amount and as a percentage increase in the appropriate line. “Charges That Can Change.” The amounts shown in Blocks 9, 10 and 11 on the borrower's GFE must be entered in the appropriate lines in the Good Faith Estimate column. Any third party settlement services for which the borrower selected a provider other than one identified by the loan originator must also be included in this section. The amounts shown on the HUD-1/1A for each charge in this section must be entered in the corresponding line in the HUD-1/1A column, along with the appropriate HUD-1/1A line number. The HUD-1/1A column must include any amounts shown on page 2 of the HUD-1 in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by or on behalf of the borrower. Additional lines may be added if necessary. Loan Terms This section must be completed in accordance with the information and instructions provided by the lender. The lender must provide this information in a format that permits the settlement agent to simply enter the necessary information in the appropriate spaces, without the settlement agent having to refer to the loan documents themselves. For reverse mortgages, the initial monthly amount owed for principal, interest, and any mortgage insurance must read “N/A” and the loan term is disclosed as “N/A” when the loan term is conditioned upon the occurrence of a specified event, such as the death of the borrower or the borrower no longer occupying the property for a certain period of time. Additionally, for reverse mortgages the question “Even if you make payments on time, can your loan balance rise?” must be answered as “Yes” and the maximum amount disclosed as “Unknown.” For reverse mortgages that establish an arrangement for the payment of property taxes, homeowner's insurance, or other recurring charges through draws from the principal limit, the second box in the “Total monthly amount owed including escrow payments” section must be checked. The blank following the first $ must be completed with “0” and an asterisk, and all items that will be paid using draws from the principal limit, such as for property taxes, must also be indicated. An asterisk must also be placed in this section with the following statement: “Paid by or through draws from the principal limit.” Reverse mortgage transactions are not considered to be balloon transactions for the purposes of the loan terms disclosed on page 3 of the HUD-1. Instructions for Completing HUD-1A Note: The HUD-1A is an optional form that may be used for refinancing and subordinate-lien federally related mortgage loans, as well as for any other one-party transaction that does not involve the transfer of title to residential real property. The HUD-1 form may also be used for such transactions, by utilizing the borrower's side of the HUD-1 and following the relevant parts of the instructions as set forth above. The use of either the HUD-1 or HUD-1A is not mandatory for open-end lines of credit (home-equity plans), as long as the provisions of Regulation Z are followed. Background The HUD-1A settlement statement is to be used as a statement of actual charges and adjustments to be given to the borrower at settlement, as defined in this part. The instructions for completion of the HUD-1A are for the benefit of the settlement agent who prepares the statement; the instructions are not a part of the statement and need not be transmitted to the borrower. There is no objection to using the HUD-1A in transactions in which it is not required, and its use in open-end lines of credit transactions (home-equity plans) is encouraged. It may not be used as a substitute for a HUD-1 in any transaction that has a seller. Refer to the “definitions” section (§ 1024.2) of 12 CFR part 1024 (Regulation X) for specific definitions of terms used in these instructions. General Instructions Information and amounts may be filled in by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Refer to 12 CFR 1024.9 regarding rules for reproduction of the HUD-1A. Additional pages may be attached to the HUD-1A for the inclusion of customary recitals and information used locally for settlements or if there are insufficient lines on the HUD-1A. The settlement agent shall complete the HUD-1A in accordance with the instructions for the HUD-1 to the extent possible, including the instructions for disclosing items paid outside closing and for no cost loans. Blank lines are provided in section L for any additional settlement charges. Blank lines are also provided in section M for recipients of all or portions of the loan proceeds. The names of the recipients of the settlement charges in section L and the names of the recipients of the loan proceeds in section M should be set forth on the blank lines. Line-Item Instructions Page 1 The identification information at the top of the HUD-1A should be completed as follows: The borrower's name and address is entered in the space provided. If the property securing the loan is different from the borrower's address, the address or other location information on the property should be entered in the space provided. The loan number is the lender's identification number for the loan. The settlement date is the date of settlement in accordance with 12 CFR 1024.2, not the end of any applicable rescission period. The name and address of the lender should be entered in the space provided. Section L. Settlement Charges. Line 1400 in the HUD-1A is for the total settlement charges charged to the borrower. Enter this total on line 1601. This total should include section L amounts from additional pages, if any are attached to this HUD-1A. Section M. Disbursement to Others. For example, in a refinancing transaction, the loan proceeds are used to pay off an existing loan. The name of the lender for the loan being paid off and the pay-off balance would be entered in section M. In a home improvement transaction when the proceeds are to be paid to the home improvement contractor, the name of the contractor and the amount paid to the contractor would be entered in section M. In a consolidation loan, or when part of the loan proceeds is used to pay off other creditors, the name of each creditor and the amount paid to that creditor would be entered in section M. If the proceeds are to be given directly to the borrower and the borrower will use the proceeds to pay off existing obligations, this would not be reflected in section M. Section N. Net Settlement. Line 1602 is the total amount from line 1400. Line 1603 is the total amount from line 1520. Line 1604 is the amount disbursed to the borrower. This is determined by adding together the amounts for lines 1600 and 1601, and then subtracting any amounts listed on lines 1602 and 1603. Page 2 This section of the HUD-1A is similar to page 3 of the HUD-1. The instructions for page 3 of the HUD-1 should be followed insofar as possible. The HUD-1/1A Column should include any amounts shown on page 1 of the HUD-1A in the column as paid for by the borrower, plus any amounts that are shown as P.O.C. by the borrower. Inapplicable charges should be ignored. [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 80104, Dec. 31, 2013] Appendix B to Part 1024—Illustrations of Requirements of RESPA The following illustrations provide additional guidance on the meaning and coverage of the provisions of RESPA. Other provisions of Federal or state law may also be applicable to the practices and payments discussed in the following illustrations. 1. Facts: Comments: 2. Facts: Comments: 3. Facts: Comments: 4. Facts: Comments: 5. Facts: Comments: bona fide 6. Facts. Comments: 7. Facts: Comments: 8. Facts: Comments: 9. Facts: Comments: e.g., 10. Facts: Comments: 11. Facts: e.g., etc. Comments: 12. Facts. Comment. 13. Facts. Comments. [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 80105, Dec. 31, 2013] Appendix C to Part 1024—Instructions for Completing Good Faith Estimate (GFE) Form The following are instructions for completing the GFE required under section 5 of RESPA and 12 CFR 1024.7 of the Bureau regulations. The standardized form set forth in this Appendix is the required GFE form and must be provided exactly as specified; provided, however, preparers may replace HUD's OMB approval number listed on the form with the Bureau's OMB approval number when they reproduce the GFE form. The instructions for completion of the GFE are primarily for the benefit of the loan originator who prepares the form and need not be transmitted to the borrower(s) as an integral part of the GFE. The required standardized GFE form must be prepared completely and accurately. A separate GFE must be provided for each loan where a transaction will involve more than one mortgage loan. General Instructions The loan originator preparing the GFE may fill in information and amounts on the form by typewriter, hand printing, computer printing, or any other method producing clear and legible results. Under these instructions, the “form” refers to the required standardized GFE form. Although the standardized GFE is a prescribed form, Blocks 3, 6, and 11 on page 2 may be adapted for use in particular loan situations, so that additional lines may be inserted there, and unused lines may be deleted. All fees for categories of charges shall be disclosed in U.S. dollar and cent amounts. Specific Instructions Page 1 Top of the Form “ Purpose.” “ Shopping for your loan.” “ Important dates.” “ Summary of your loan (i) The initial loan amount; (ii) The loan term; and (iii) The initial interest rate. For reverse mortgage transactions: (i) The initial loan amount disclosed on the GFE is the amount of the initial principal limit of the loan; (ii) The loan term is disclosed as “N/A” when the loan term is conditioned upon the occurrence of a specified event, such as the death of the borrower or the borrower no longer occupying the property for a certain period of time; and (iii) The initial interest rate is the interest rate indicated on the legal obligation. The loan originator must fill in the initial monthly amount owed for principal, interest, and any mortgage insurance. The amount shown must be the greater of: (1) The required monthly payment for principal and interest for the first regularly scheduled payment, plus any monthly mortgage insurance payment; or (2) the accrued interest for the first regularly scheduled payment, plus any monthly mortgage insurance payment. For reverse mortgage transactions where there are no regular payment periods, the loan originator must disclose “Not Applicable” or “N/A” for the initial monthly amount owed for principal, interest, and any mortgage insurance. The loan originator must indicate whether the interest rate can rise, and, if it can, must insert the maximum rate to which it can rise over the life of the loan. The loan originator must also indicate the period of time after which the interest rate can first change. The loan originator must indicate whether the loan balance can rise even if the borrower makes payments on time, for example in the case of a loan with negative amortization. If it can, the loan originator must insert the maximum amount to which the loan balance can rise over the life of the loan. For Federal, State, local, or tribal housing programs that provide payment assistance, any repayment of such program assistance should be excluded from consideration in completing this item. If the loan balance will increase only because escrow items are being paid through the loan balance, the loan originator is not required to check the box indicating that the loan balance can rise. For reverse mortgage transactions, the loan originator must indicate that the loan balance can rise even if the borrower makes payments on time and the maximum amount to which the loan balance can rise must be disclosed as “Unknown.” The loan originator must indicate whether the monthly amount owed for principal, interest, and any mortgage insurance can rise even if the borrower makes payments on time. If the monthly amount owed can rise even if the borrower makes payments on time, the loan originator must indicate the period of time after which the monthly amount owed can first change, the maximum amount to which the monthly amount owed can rise at the time of the first change, and the maximum amount to which the monthly amount owed can rise over the life of the loan. The amount used for the monthly amount owed must be the greater of: (1) The required monthly payment for principal and interest for that month, plus any monthly mortgage insurance payment; or (2) the accrued interest for that month, plus any monthly mortgage insurance payment. For reverse mortgage transactions, the loan originator must disclose that the monthly amount owed for principal, interest, and any mortgage insurance cannot rise. The loan originator must indicate whether the loan includes a prepayment penalty, and, if so, the maximum amount that it could be. The loan originator must indicate whether the loan requires a balloon payment and, if so, the amount of the payment and in how many years it will be due. Reverse mortgage transactions are not considered to be balloon transactions for the purposes of this disclosure on the GFE. “ Escrow account information. “ Summary of your settlement charges. Page 2 “ Understanding your estimated settlement charges. “Your Adjusted Origination Charges” Block 1, “ Our origination charge. i.e., Block 2, “ Your credit or charge (points) for the specific interest rate chosen. For transactions without a mortgage broker, the lender may choose not to separately disclose in this block any credit or charge for the interest rate chosen on the loan; however, if this block does not include any positive or negative figure, the lender must check the first box to indicate that “The credit or charge for the interest rate you have chosen” is included in “Our origination charge” above (see Block 1 instructions above), must insert the interest rate, and must also insert “0” in Block 2. Only one of the boxes may be checked; a credit and charge cannot occur together in the same transaction. For a mortgage broker, the credit or charge for the specific interest rate chosen is the net payment to the mortgage broker from the lender ( i.e., i.e., The amount stated in Block 2 is subject to zero tolerance while the interest rate is locked, i.e., Note: Line A, “ Your Adjusted Origination Charges. In the case of “no cost” loans, where “no cost” refers only to the loan originator's fees, Line A must show a zero charge as the adjusted origination charge. In the case of “no cost” loans where “no cost” encompasses third party fees as well as the upfront payment to the loan originator, all of the third party fees listed in Block 3 through Block 11 to be paid for by the loan originator (or borrower, if any) must be itemized and listed on the GFE. The credit for the interest rate chosen must be large enough that the total for Line A will result in a negative number to cover the third party fees. “Your Charges for All Other Settlement Services” There is a 10 percent tolerance applied to the sum of the prices of each service listed in Block 3, Block 4, Block 5, Block 6, and Block 7, where the loan originator requires the use of a particular provider or the borrower uses a provider selected or identified by the loan originator. Any services in Block 4, Block 5, or Block 6 for which the borrower selects a provider other than one identified by the loan originator are not subject to any tolerance and, at settlement, would not be included in the sum of the charges on which the 10 percent tolerance is based. Where a loan originator permits a borrower to shop for third party settlement services, the loan originator must provide the borrower with a written list of settlement services providers at the time of the GFE, on a separate sheet of paper. Block 3, “ Required services that we select. Block 4, “ Title services and lender's title insurance. Block 5, “ Owner's title insurance. Block 6, “ Required services that you can shop for. e.g., Block 7, “ Government recording charge. Block 8, “ Transfer taxes. Block 9, “ Initial deposit for your escrow account. Block 10, “ Daily interest charges. Block 11, “ Homeowner's insurance. Line B, “ Your Charges for All Other Settlement Services. Line A + B, “ Total Estimated Settlement Charges. Page 3 “Instructions” “ Understanding which charges can change at settlement. “ Using the tradeoff table. “ Using the shopping chart. “ If your loan is sold in the future. [76 FR 78981, Dec. 20, 2011, as amended at 78 FR 80105, Dec. 31, 2013] Appendix D to Part 1024—Affiliated Business Arrangement Disclosure Statement Format Notice To: From: (Entity Making Statement) Property: Date: This is to give you notice that [ referring party settlement services provider(s) referring party [A.] Set forth below is the estimated charge or range of charges for the settlement services listed. You are NOT required to use the listed provider(s) as a condition for [settlement of your loan on] [or] [purchase, sale, or refinance of] the subject property. THERE ARE FREQUENTLY OTHER SETTLEMENT SERVICE PROVIDERS AVAILABLE WITH SIMILAR SERVICES. YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATE FOR THESE SERVICES. [ provider and settlement service [ charge or range of charges [B.] Set forth below is the estimated charge or range of charges for the settlement services of an attorney, credit reporting agency, or real estate appraiser that we, as your lender, will require you to use, as a condition of your loan on this property, to represent our interests in the transaction. [ provider and settlement service [ charge or range of charges ACKNOWLEDGMENT I/we have read this disclosure form, and understand that referring party Signature [INSTRUCTIONS TO PREPARER:] [Use paragraph A for referrals other than those by a lender to an attorney, a credit reporting agency, or a real estate appraiser that a lender is requiring a borrower to use to represent the lender's interests in the transaction. Use paragraph B for those referrals to an attorney, credit reporting agency, or real estate appraiser that a lender is requiring a borrower to use to represent the lender's interests in the transaction. When applicable, use both paragraphs. Specific timing rules for delivery of the affiliated business disclosure statement are set forth in 12 CFR 1024.15(b)(1) of Regulation X). These INSTRUCTIONS TO PREPARER should not appear on the statement.] Appendix E to Part 1024—Arithmetic Steps I. Example Illustrating Aggregate Analysis Assumptions Disbursements: $360 for school taxes disbursed on September 20 $1,200 for county property taxes: $500 disbursed on July 25 $700 disbursed on December 10 Cushion: One-sixth of estimated annual disbursements Settlement: May 15 First Payment: July 1 Step 1—Initial Trial Balance Aggregate pmt disb bal Jun 0 0 0 Jul 130 500 −370 Aug 130 0 −240 Sep 130 360 −470 Oct 130 0 −340 Nov 130 0 −210 Dec 130 700 −780 Jan 130 0 −650 Feb 130 0 −520 Mar 130 0 −390 Apr 130 0 −260 May 130 0 −130 Jun 130 0 0 Step 2—Adjusted Trial Balance [Increase monthly balances to eliminate negative balances] Aggregate pmt disb bal Jun 0 0 780 Jul 130 500 410 Aug 130 0 540 Sep 130 360 310 Oct 130 0 440 Nov 130 0 570 Dec 130 700 0 Jan 130 0 130 Feb 130 0 260 Mar 130 0 390 Apr 130 0 520 May 130 0 650 Jun 130 0 780 Step 3—Trial Balance With Cushion Aggregate pmt disb bal Jun 0 0 1040 Jul 130 500 670 Aug 130 0 800 Sep 130 360 570 Oct 130 0 700 Nov 130 0 830 Dec 130 700 260 Jan 130 0 390 Feb 130 0 520 Mar 130 0 650 Apr 130 0 780 May 130 0 910 Jun 130 0 1040 II. Example Illustrating Single-Item Analysis Assumptions Disbursements: $360 for school taxes disbursed on September 20 $1,200 for county property taxes: $500 disbursed on July 25 $700 disbursed on December 10 Cushion: One-sixth of estimated annual disbursements Settlement: May 15 First Payment: July 1 Step 1—Initial Trial Balance Single-item Taxes School taxes pmt disb bal pmt disb bal June 0 0 0 0 0 0 July 100 500 −400 30 0 30 August 100 0 −300 30 0 60 September 100 0 −200 30 360 −270 October 100 0 −100 30 0 −240 November 100 0 0 30 0 −210 December 100 700 −600 30 0 −180 January 100 0 −500 30 0 −150 February 100 0 −400 30 0 −120 March 100 0 −300 30 0 −90 April 100 0 −200 30 0 −60 May 100 0 −100 30 0 −30 June 100 0 0 30 0 0 Step 2—Adjusted Trial Balance [Increase monthly balances to eliminate negative balances] Single-item Taxes School taxes pmt disb bal pmt disb bal Jun 0 0 600 0 0 270 Jul 100 500 200 30 0 300 Aug 100 0 300 30 0 330 Sep 100 0 400 30 360 0 Oct 100 0 500 30 0 30 Nov 100 0 600 30 0 60 Dec 100 700 0 30 0 90 Jan 100 0 100 30 0 120 Feb 100 0 200 30 0 150 Mar 100 0 300 30 0 180 Apr 100 0 400 30 0 210 May 100 0 500 30 0 240 Jun 100 0 600 30 0 270 Step 3—Trial Balance With Cushion Single-item Taxes School taxes pmt disb bal pmt disb bal Jun 0 0 800 0 0 330 Jul 100 500 400 30 0 360 Aug 100 0 500 30 0 390 Sep 100 0 600 30 360 60 Oct 100 0 700 30 0 90 Nov 100 0 800 30 0 120 Dec 100 700 200 30 0 150 Jan 100 0 300 30 0 180 Feb 100 0 400 30 0 210 Mar 100 0 500 30 0 240 Apr 100 0 600 30 0 270 May 100 0 700 30 0 300 Jun 100 0 800 30 0 330 Appendix MS to Part 1024—Mortgage Servicing Appendix MS-1 to Part 1024 [Sample language; use business stationery or similar heading] [Date] SERVICING DISCLOSURE STATEMENT NOTICE TO FIRST LIEN MORTGAGE LOAN APPLICANTS: THE RIGHT TO COLLECT YOUR MORTGAGE LOAN PAYMENTS MAY BE TRANSFERRED You are applying for a mortgage loan covered by the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2601 et seq. Servicing Transfer Information [We may assign, sell, or transfer the servicing of your loan while the loan is outstanding.] [or] [We do not service mortgage loans of the type for which you applied. We intend to assign, sell, or transfer the servicing of your mortgage loan before the first payment is due.] [or] [The loan for which you have applied will be serviced at this financial institution and we do not intend to sell, transfer, or assign the servicing of the loan.] [INSTRUCTIONS TO PREPARER: Insert the date and select the appropriate language under “Servicing Transfer Information.” The model format may be annotated with further information that clarifies or enhances the model language.] Appendix MS-2 to Part 1024 Notice of Servicing Transfer The servicing of your mortgage loan is being transferred, effective [Date]. This means that after this date, a new servicer will be collecting your mortgage loan payments from you. Nothing else about your mortgage loan will change. [Name of present servicer] is now collecting your payments. [Name of present servicer] will stop accepting payments received from you after [Date]. [Name of new servicer] will collect your payments going forward. Your new servicer will start accepting payments received from you on [Date]. Send all payments due on or after [Date] to [Name of new servicer] at this address: [New servicer address]. If you have any questions for either your present servicer, [Name of present servicer] or your new servicer [Name of new servicer], about your mortgage loan or this transfer, please contact them using the information below: Current Servicer: New Servicer: [Name of present servicer] [Name of new servicer] [Individual or Department] [Individual or Department] [Telephone Number] [Telephone Number] [Address] [Address] [Use this paragraph if appropriate; otherwise omit.] Important note about insurance: If you have mortgage life or disability insurance or any other type of optional insurance, the transfer of servicing rights may affect your insurance in the following way: You should do the following to maintain coverage: Under Federal law, during the 60-day period following the effective date of the transfer of the loan servicing, a loan payment received by your old servicer on or before its due date may not be treated by the new servicer as late, and a late fee may not be imposed on you. [NAME OF PRESENT SERVICER] Date [and] [or] [NAME OF NEW SERVICER] Date [78 FR 10886, Feb. 14, 2013] Appendix MS-3 to Part 1024 Model Force-Placed Insurance Notice Forms Table of Contents MS-3(A)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(c)(2) MS-3(B)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(d)(2)(i) MS-3(C)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(d)(2)(ii) MS-3(D)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(e)(2) MS-3(A)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(c)(2) [Name and Mailing Address of Servicer] [Date of Notice] [Borrower's Name] [Borrower's Mailing Address] Subject: Please provide insurance information for Dear [Borrower's Name]: Our records show that your [hazard] [Insurance Type] insurance [is expiring] [expired] [provides insufficient coverage], and we do not have evidence that you have obtained new coverage. Because [hazard] [Insurance Type] insurance is required on your property, [we bought insurance for your property] [we plan to buy insurance for your property]. You should immediately provide us with your insurance information. [Describe the insurance information the borrower must provide]. [The information must be provided in writing.] The insurance we [bought] [buy]: • May be significantly more expensive than the insurance you can buy yourself. • May not provide as much coverage as an insurance policy you buy yourself. If you have any questions, please contact us at [telephone number]. [If applicable, provide a statement advising a borrower to review additional information provided in the same transmittal.] MS-3(B)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(d)(2)(i) [Name and Mailing Address of Servicer] [Date of Notice] [Borrower's Name] [Borrower's Mailing Address] Subject: Second and final notice—please provide insurance information for Dear [Borrower's Name]: This is your second and final notice that our records show that your [hazard] [Insurance Type] insurance [is expiring] [expired] [provides insufficient coverage], and we do not have evidence that you have obtained new coverage. Because [hazard] [Insurance Type] insurance is required on your property, [we bought insurance for your property] [we plan to buy insurance for your property]. You should immediately provide us with your insurance information. [Describe the insurance information the borrower must provide]. [The information must be provided in writing.] The insurance we [bought] [buy]: • [Costs $[premium charge]] [Will cost an estimated $[premium charge]] annually, which may be significantly more expensive than insurance you can buy yourself. • May not provide as much coverage as an insurance policy you buy yourself. If you have any questions, please contact us at [telephone number]. [If applicable, provide a statement advising a borrower to review additional information provided in the same transmittal.] MS-3(C)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(d)(2)(ii) [Name and Mailing Address of Servicer] [Date of Notice] [Borrower's Name] [Borrower's Mailing Address] Subject: Second and final notice—please provide insurance information for Dear [Borrower's Name]: We received the insurance information you provided, but we are unable to verify coverage from [Date Range]. Please provide us with insurance information for [Date Range] immediately. We will charge you for insurance we [bought] [plan to buy] for [Date Range] unless we can verify that you have insurance coverage for [Date Range]. The insurance we [bought] [buy]: • [Costs $[premium charge]] [Will cost an estimated $[premium charge]] annually, which may be significantly more expensive than insurance you can buy yourself. • May not provide as much coverage as an insurance policy you buy yourself. If you have any questions, please contact us at [telephone number]. [If applicable, provide a statement advising a borrower to review additional information provided in the same transmittal.] MS-3(D)—Model Form for Force-Placed Insurance Notice Containing Information Required by § 1024.37(e)(2) [Name and Mailing Address of Servicer] [Date of Notice] [Borrower's Name] [Borrower's Mailing Address] Subject: Please update insurance information for Dear [Borrower's Name]: Because we did not have evidence that you had [hazard] [Insurance Type] insurance on the property listed above, we bought insurance on your property and added the cost to your mortgage loan account. The policy that we bought [expired] [is scheduled to expire]. Because [hazard][Insurance Type] insurance] is required on your property, we intend to maintain insurance on your property by renewing or replacing the insurance we bought. The insurance we buy: • [Costs $[premium charge]] [Will cost an estimated $[premium charge]] annually, which may be significantly more expensive than insurance you can buy yourself. • May not provide as much coverage as an insurance policy you buy yourself. If you buy [hazard] [Insurance Type] insurance, you should immediately provide us with your insurance information. [Describe the insurance information the borrower must provide]. [The information must be provided in writing.] If you have any questions, please contact us at [telephone number]. [If applicable, provide a statement advising a borrower to review additional information provided in the same transmittal.] [81 FR 72376, Oct. 19, 2016] Appendix MS-4 to Part 1024—Model Clauses for the Written Early Intervention Notice MS-4(A)—Statement Encouraging the Borrower To Contact the Servicer and Additional Information About Loss Mitigation Options (§ 1024.39( b i ii iv Call us today to learn more about your options and instructions for how to apply. [The longer you wait, or the further you fall behind on your payments, the harder it will be to find a solution.] [Servicer Name] [Servicer Address] [Servicer Telephone Number] [For more information, visit [Servicer Web site] [and][or] [Email Address]]. MS-4(B)—Available Loss Mitigation Options (§ 1024.39( b iii [If you need help, the following options may be possible (most are subject to lender approval):] • [Refinance your loan with us or another lender;] • [Modify your loan terms with us;] • [Payment forbearance temporarily gives you more time to pay your monthly payment;] [or] • [If you are not able to continue paying your mortgage, your best option may be to find more affordable housing. As an alternative to foreclosure, you may be able to sell your home and use the proceeds to pay off your current loan.] MS-4(C)—Housing Counselors (§ 1024.39( b v For help exploring your options, the Federal government provides contact information for housing counselors, which you can access by contacting [the Consumer Financial Protection Bureau at [Bureau Housing Counselor List Web site]] [the Department of Housing and Urban Development at [HUD Housing Counselor List Web site]] or by calling [HUD Housing Counselor List Telephone Number]. MS-4(D)—Written Early Intervention Notice for Servicers Subject to FDCPA (§ 1024.39( d iii This is a legally required notice. We are sending this notice to you because you are behind on your mortgage payment. We want to notify you of possible ways to avoid losing your home. We have a right to invoke foreclosure based on the terms of your mortgage contract. Please read this letter carefully. [78 FR 10887, Feb. 14, 2013, as amended at 81 FR 72376, Oct. 19, 2016; 82 FR 30948, July 5, 2017] Supplement I to Part 1024—Official Bureau Interpretations Introduction 1. Official status. 2. Requests for official interpretations. 3. Unofficial oral interpretations. 4. Rules of construction. (b) Throughout the commentary, reference to “this section” or “this paragraph” means the section or paragraph in the regulation that is the subject of the comment. 5. Comment designations. Subpart A—General Provisions Section 1024.5 Coverage of RESPA 5(c) Relation to State laws. Paragraph 5(c)(1). 1. State laws that are inconsistent with the requirements of RESPA or Regulation X may be preempted by RESPA or Regulation X. State laws that give greater protection to consumers are not inconsistent with and are not preempted by RESPA or Regulation X. In addition, nothing in RESPA or Regulation X should be construed to preempt the entire field of regulation of the practices covered by RESPA or Regulation X, including the regulations in Subpart C with respect to mortgage servicers or mortgage servicing. Subpart B—Mortgage Settlement and Escrow Accounts [Reserved] Section 1024.17 Escrow Accounts 17(k) Timely payments. 17(k)(5) Timely payment of hazard insurance. 17(k)(5)(ii) Inability to disburse funds. 17(k)(5)(ii)(A)When inability exists. 1. Examples of reasonable basis to believe that a policy has been cancelled or not renewed. i. A borrower notifies a servicer that the borrower has cancelled the hazard insurance coverage, and the servicer has not received notification of other hazard insurance coverage. ii. A servicer receives a notification of cancellation or non-renewal from the borrower's insurance company before payment is due on the borrower's hazard insurance. iii. A servicer does not receive a payment notice by the expiration date of the borrower's hazard insurance policy. 17(k)(5)(ii)(C) Recoupment for advances. 1. Month-to-month advances. Subpart C—Mortgage Servicing § 1024.30—Scope 30(b) Exemptions. 1. Exemption for Farm Credit System institutions. Paragraph 30(c)(2). 1. Principal residence. 30(d) Successors in interest. 1. Treatment of confirmed successors in interest. 2. Assumption of the mortgage loan obligation. 3. Treatment of transferor borrowers. § 1024.31—Definitions Delinquency. 1. Length of delinquency. 2. Application of funds. 3. Payment tolerance. 4. Creditor's contract rights. Loss mitigation application. 1. Borrower's representative. Loss mitigation option. 1. Types of loss mitigation options. 2. Available through the servicer. Qualified written request. 1. A qualified written request is a written notice a borrower provides to request a servicer either correct an error relating to the servicing of a mortgage loan or to request information relating to the servicing of the mortgage loan. A qualified written request is not required to include both types of requests. For example, a qualified written request may request information relating to the servicing of a mortgage loan but not assert that an error relating to the servicing of a loan has occurred. 2. A qualified written request is just one form that a written notice of error or information request may take. Thus, the error resolution and information request requirements in §§ 1024.35 and 1024.36 apply as set forth in those sections irrespective of whether the servicer receives a qualified written request. Service provider. 1. Service providers may include attorneys retained to represent a servicer or an owner or assignee of a mortgage loan in a foreclosure proceeding, as well as other professionals retained to provide appraisals or inspections of properties. Successor in interest. 1. Joint tenants and tenants by the entirety. 2. Beneficiaries of trusts. inter vivos inter vivos inter vivos inter vivos § 1024.32—General Disclosure Requirements. 32(c) Confirmed successors in interest. 32(c)(1) Optional notice with acknowledgment form. 1. A servicer may identify in the acknowledgment form examples of the types of notices and communications identified in § 1024.32(c)(1)(iii), such as periodic statements and mortgage servicing transfer notices. Any examples provided should be the types of notices or communications that would be available to a confirmed successor in interest if the confirmed successor in interest executed the acknowledgment and returned it to the servicer. 32(c)(2) Effect of failure to execute acknowledgment. 1. No time limit to return acknowledgment. 2. Effect of revocation of acknowledgment. 32(c)(4) Multiple notices unnecessary. 1. Specific written disclosure. § 1024.33—Mortgage Servicing Transfers 33(a) Servicing disclosure statement. 1. Terminology. 2. Delivery to co-applicants. 3. Lender servicing. 33(b) Notices of transfer of loan servicing. Paragraph 33(b)(3). 1. Delivery. 33(c) Borrower payments during transfer of servicing. 33(c)(1) Payments not considered late. 1. Late fees prohibited. See 2. Compliance with § 1024.39. § 1024.34—Timely Escrow Payments and Treatment of Escrow Balances Paragraph 34(b)(1). 1. Netting of funds. Paragraph 34(b)(2). 1. Refund always permissible. 2. Borrower agreement. § 1024.35—Error Resolution Procedures 35(a) Notice of error. 1. Borrower's representative. 2. Information request. 35(b) Scope of error resolution. 1. Noncovered errors. i. An error relating to the origination of a mortgage loan; ii. An error relating to the underwriting of a mortgage loan; iii. An error relating to a subsequent sale or securitization of a mortgage loan; iv. An error relating to a determination to sell, assign, or transfer the servicing of a mortgage loan. However, an error relating to the failure to transfer accurately and timely information relating to the servicing of a borrower's mortgage loan account to a transferee servicer is an error for purposes of § 1024.35. 2. Unreasonable basis. i. A late fee for a payment that was not late; ii. A charge imposed by a service provider for a service that was not actually rendered; iii. A default property management fee for borrowers that are not in a delinquency status that would justify the charge; or iv. A charge for force-placed insurance in a circumstance not permitted by § 1024.37. 35(c) Contact information for borrowers to assert errors. 1. Exclusive address not required. 2. Notice of an exclusive address. i. The written notice designating the specific address, required pursuant to § 1024.35(c) and § 1024.36(b). ii. Any periodic statement or coupon book required pursuant to 12 CFR 1026.41. iii. Any Web site the servicer maintains in connection with the servicing of the loan. iv. Any notice required pursuant to §§ 1024.39 or .41 that includes contact information for assistance. 3. Multiple offices. 4. Internet intake of notices of error. 35(e) Response to notice of error. 35(e)(1) Investigation and response requirements. Paragraph 35(e)(1)(i). 1. Notices alleging multiple errors; separate responses permitted. Paragraph 35(e)(1)(ii). 1. Different or additional errors; separate responses permitted. 35(e)(3) Time limits. 35(e)(3)(i) In general. Paragraph 35(e)(3)(i)(B). 1. Foreclosure sale timing. 35(e)(3)(ii) Extension of time limit. 1. Notices alleging multiple errors; extension of time. 35(e)(4) Copies of documentation. 1. Types of documents to be provided. 35(g) Requirements not applicable. 35(g)(1) In general. Paragraph 35(g)(1)(i). 1. New and material information. Paragraph 35(g)(1)(ii). 1. Examples of overbroad notices of error. i. Assertions of errors regarding substantially all aspects of a mortgage loan, including errors relating to all aspects of mortgage origination, mortgage servicing, and foreclosure, as well as errors relating to the crediting of substantially every borrower payment and escrow account transaction; ii. Assertions of errors in the form of a judicial action complaint, subpoena, or discovery request that purports to require servicers to respond to each numbered paragraph; and iii. Assertions of errors in a form that is not reasonably understandable or is included with voluminous tangential discussion or requests for information, such that a servicer cannot reasonably identify from the notice of error any error for which § 1024.35 requires a response. 35(h) Payment requirements prohibited. 1. Borrower obligation to make payments. § 1024.36—Requests for Information 36(a) Information request. 1. Borrower's representative. 2. Owner or assignee of a mortgage loan. ii. When the loan is held in a trust for which an appointed trustee receives payments on behalf of the trust, a servicer complies with § 1024.36(d) by responding to a borrower's request for information regarding the owner, assignee, or trust of the mortgage loan with the following information, as applicable: A. For any request for information where the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is not the owner of the loan or the trustee of the securitization trust in which the loan is held: The name of the trust, and the name, address, and appropriate contact information for the trustee. Assume, for example, a mortgage loan is owned by Mortgage Loan Trust, Series ABC-1, for which XYZ Trust Company is the trustee. The servicer complies with § 1024.36(d) by identifying the owner as Mortgage Loan Trust, Series ABC-1, and providing the name, address, and appropriate contact information for XYZ Trust Company as the trustee. B. If the request for information did not expressly request the name or number of the trust or pool and the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is the owner of the loan or the trustee of the securitization trust in which the loan is held: The name and contact information for the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, as applicable, without also providing the name of the trust. C. If the request for information did expressly request the name or number of the trust or pool and the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is the owner of the loan or the trustee of the securitization trust in which the loan is held: The name of the trust, and the name, address, and appropriate contact information for the trustee, as in comment 36(a)-2.ii.A above. 36(b) Contact information for borrowers to request information. 1. Exclusive address not required. 2. Notice of an exclusive address. i. The written notice designating the specific address, required pursuant to § 1024.35(c) and § 1024.36(b). ii. Any periodic statement or coupon book required pursuant to 12 CFR 1026.41. iii. Any Web site the servicer maintains in connection with the servicing of the loan. iv. Any notice required pursuant to §§ 1024.39 or .41 that includes contact information for assistance. 3. Multiple offices. 4. Internet intake of information requests. 36(d) Response to information request. 36(d)(1) Investigation and response requirements. Paragraph 36(d)(1)(ii). 1. Information not available. i. The information is not in the servicer's control or possession, or ii. The information cannot be retrieved in the ordinary course of business through reasonable efforts. 2. Examples. i. A borrower requests a copy of a telephonic communication with a servicer. The servicer's personnel have access in the ordinary course of business to audio recording files with organized recordings or transcripts of borrower telephone calls and can identify the communication referred to by the borrower through reasonable business efforts. The information requested by the borrower is available to the servicer. ii. A borrower requests information stored on electronic back-up media. Information on electronic back-up media is not accessible by the servicer's personnel in the ordinary course of business without undertaking extraordinary efforts to identify and restore the information from the electronic back-up media. The information requested by the borrower is not available to the servicer. iii. A borrower requests information stored at an offsite document storage facility. A servicer has a right to access documents at the offsite document storage facility and servicer personnel can access those documents through reasonable efforts in the ordinary course of business. The information requested by the borrower is available to the servicer assuming that the information can be found within the offsite documents with reasonable efforts. 36(f) Requirements not applicable. 36(f)(1) In general. Paragraph 36(f)(1)(i). 1. A borrower's request for a type of information that can change over time is not substantially the same as a previous information request for the same type of information if the subsequent request covers a different time period than the prior request. Paragraph 36(f)(1)(ii). 1. Confidential, proprietary or privileged information. i. Information regarding management or profitability of a servicer, including information provided to investors in the servicer. ii. Compensation, bonuses, or personnel actions relating to servicer personnel, including personnel responsible for servicing a borrower's mortgage loan account; iii. Records of examination reports, compliance audits, borrower complaints, and internal investigations or external investigations; or iv. Information protected by the attorney-client privilege. Paragraph 36(f)(1)(iii). 1. Examples of irrelevant information. i. Information that relates to the servicing of mortgage loans other than a borrower's mortgage loan, including information reported to the owner of a mortgage loan regarding individual or aggregate collections for mortgage loans owned by that entity; ii. The servicer's training program for servicing personnel; iii. The servicer's servicing program guide; or iv. Investor instructions or requirements for servicers regarding criteria for negotiating or approving any program with a borrower, including any loss mitigation option. Paragraph 36(f)(1)(iv). 1. Examples of overbroad or unduly burdensome requests for information. i. Requests for information that seek documents relating to substantially all aspects of mortgage origination, mortgage servicing, mortgage sale or securitization, and foreclosure, including, for example, requests for all mortgage loan file documents, recorded mortgage instruments, servicing information and documents, and sale or securitization information and documents; ii. Requests for information that are not reasonably understandable or are included with voluminous tangential discussion or assertions of errors; iii. Requests for information that purport to require servicers to provide information in specific formats, such as in a transcript, letter form in a columnar format, or spreadsheet, when such information is not ordinarily stored in such format; and iv. Requests for information that are not reasonably likely to assist a borrower with the borrower's account, including, for example, a request for copies of the front and back of all physical payment instruments (such as checks, drafts, or wire transfer confirmations) that show payments made by the borrower to the servicer and payments made by a servicer to an owner or assignee of a mortgage loan. 36(i) Potential successors in interest. 1. Requests that indicate that the person may be a successor in interest. 2. Time limits. 3. Potential successor in interest's representative. § 1024.37—Force-Placed Insurance 37(a) Definition of force-placed insurance. 37(a)(2) Types of insurance not considered force-placed insurance. Paragraph 37(a)(2)(iii). 1. Servicer's discretion. 37(b) Basis for charging force-placed insurance. 1. Reasonable basis to believe. 37(c) Requirements before charging borrower for force-placed insurance. 37(c)(1) In general. Paragraph 37(c)(1)(i). 1. Assessing premium charge or fee. Paragraph 37(c)(1)(iii). 1. Extension of time. 2. Evidence demonstrating insurance. Paragraph 37(c)(2)(v). 1. Identifying type of hazard insurance. 37(d) Reminder notice. 37(d)(1) In general. 1. When a servicer is required to deliver or place in the mail the written notice pursuant to § 1024.37(d)(1), the content of the reminder notice will be different depending on the insurance information the servicer has received from the borrower. For example: i. Assume that, on June 1, the servicer places in the mail the written notice required by § 1024.37(c)(1)(i) to Borrower A. The servicer does not receive any insurance information from Borrower A. The servicer must deliver to Borrower A or place in the mail a reminder notice, with the information required by § 1024.37(d)(2)(i), at least 30 days after June 1 and at least 15 days before the servicer charges Borrower A for force-placed insurance. ii. Assume the same example, except that Borrower A provides the servicer with insurance information on June 18, but the servicer cannot verify that Borrower A has hazard insurance in place continuously based on the information Borrower A provided ( e.g., 37(d)(2) Content of reminder notice. 37(d)(2)(i) Servicer receiving no insurance information. Paragraph 37(d)(2)(i)(D). 1. Reasonable estimate of the cost of force-placed insurance. 37(d)(5) Updating notice with borrower information. 1. Reasonable time. 37(e) Renewal or replacing force-placed insurance. 37(e)(1) In general. 1. For purposes of § 1024.37(e)(1), as evidence that the borrower has purchased hazard insurance coverage that complies with the loan contract's requirements, a servicer may require a borrower to provide a form of written confirmation as described in comment 37(c)(1)(iii)-2, and may reject evidence of coverage submitted by the borrower for the reasons described in comment 37(c)(1)(iii)-2. 37(e)(1)(iii) Charging before end of notice period. 1. Example. Paragraph 37(e)(2)(vii). 1. Reasonable estimate of the cost of force-placed insurance. 37(g) Cancellation of force-placed insurance. Paragraph 37(g)(2). 1. Period of overlapping insurance coverage. Section 1024.38—General servicing policies, procedures, and requirements. 38(a) Reasonable policies and procedures. 1. Policies and procedures. 2. Procedures used. 38(b) Objectives. 38(b)(1) Accessing and providing timely and accurate information. Paragraph 38(b)(1)(ii). 1. Errors committed by service providers. Paragraph 38(b)(1)(iv). 1. Accurate and current information for owners or assignees of mortgage loans relating to loan modifications. Paragraph 38(b)(1)(vi). 1. Identification of potential successors in interest. 2. Documents reasonably required. 3. Examples of reasonable requirements. i. Tenancy by the entirety or joint tenancy. e.g., ii. Affidavits of heirship. iii. Divorce or legal separation. iv. Living spouses or parents. 4. Additional documentation required for confirmation determination. 5. Prompt confirmation and loss mitigation. 38(b)(2) Properly evaluating loss mitigation applications. Paragraph 38(b)(2)(ii). 1. Means of identifying all available loss mitigation options. e.g., Paragraph 38(b)(2)(v). 1. Owner or assignee requirements. 38(b)(3) Facilitating oversight of, and compliance by, service providers. Paragraph 38(b)(3)(iii). 1. Sharing information with service provider personnel handling foreclosure proceedings. 38(b)(4) Facilitating transfer of information during servicing transfers. Paragraph 38(b)(4)(i). 1. Electronic document transfers. 2. Loss mitigation documents. Paragraph 38(b)(4)(ii). 1. Missing loss mitigation documents and information. 38(b)(5) Informing borrowers of written error resolution and information request procedures. 1. Manner of informing borrowers. 2. Oral complaints and requests. 3. Notices of error incorrectly sent to addresses associated with submission of loss mitigation applications or the continuity of contact. 38(c) Standard requirements. 38(c)(1)Record retention. 1. Methods of retaining records. 38(c)(2) Servicing file. 1. Timing. 2. Borrower requests for servicing file. Paragraph 38(c)(2)(iv). 1. Report of data fields. § 1024.39—Early Intervention Requirements for Certain Borrowers 39(a) Live Contact. 1. Delinquency. i. Assume a mortgage loan obligation with a monthly billing cycle and monthly payments of $2,000 representing principal, interest, and escrow due on the first of each month. A. The borrower fails to make a payment of $2,000 on, and makes no payment during the 36-day period after, January 1. The servicer must establish or make good faith efforts to establish live contact not later than 36 days after January 1— i.e., B. The borrower makes no payments during the period January 1 through April 1, although payments of $2,000 each on January 1, February 1, and March 1 are due. Assuming it is not a leap year, the borrower is 90 days delinquent as of April 1. The servicer may time its attempts to establish live contact such that a single attempt will meet the requirements of § 1024.39(a) for two missed payments. To illustrate, the servicer complies with § 1024.39(a) if the servicer makes a good faith effort to establish live contact with the borrower, for example, on February 5 and again on March 25. The February 5 attempt meets the requirements of § 1024.39(a) for both the January 1 and February 1 missed payments. The March 25 attempt meets the requirements of § 1024.39(a) for the March 1 missed payment. ii. A borrower who is performing as agreed under a loss mitigation option designed to bring the borrower current on a previously missed payment is not delinquent for purposes of § 1024.39. iii. During the 60-day period beginning on the effective date of transfer of the servicing of any mortgage loan, a borrower is not delinquent for purposes of § 1024.39 if the transferee servicer learns that the borrower has made a timely payment that has been misdirected to the transferor servicer and the transferee servicer documents its files accordingly. See § 1024.33(c)(1) and comment 33(c)(1)-2. iv. A servicer need not establish live contact with a borrower unless the borrower is delinquent during the 36 days after a payment due date. If the borrower satisfies a payment in full before the end of the 36-day period, the servicer need not establish live contact with the borrower. For example, if a borrower misses a January 1 due date but makes that payment on February 1, a servicer need not establish or make good faith efforts to establish live contact by February 6. 2. Establishing live contact. 3. Good faith efforts. 4. Promptly inform if appropriate. i. Servicer's determination. A. A servicer provides information about the availability of loss mitigation options to a borrower who notifies a servicer during live contact of a material adverse change in the borrower's financial circumstances that is likely to cause the borrower to experience a long-term delinquency for which loss mitigation options may be available. B. A servicer does not provide information about the availability of loss mitigation options to a borrower who has missed a January 1 payment and notified the servicer that full late payment will be transmitted to the servicer by February 15. ii. Promptly inform. 5. Borrower's representative. 6. Relationship between live contact and loss mitigation procedures. 39(b) Written notice. 39(b)(1) Notice required. 1. Delinquency. i.e., 2. Frequency of the written notice. i.e., i. If the borrower is 45 days or more delinquent on October 12, the date that is 180 days after the prior provision of the written notice, the servicer is required to provide the written notice again on October 12. ii. If the borrower is less than 45 days delinquent on October 12, the servicer must again provide the written notice 45 days after the payment due date for which the borrower remains delinquent. For example, if the borrower becomes delinquent on October 1, and the amount due is not fully paid during the 45 days after October 1, the servicer will need to provide the written notice again no later than 45 days after October 1— i.e., 3. Borrower's representative. 4. Relationship to § 1024.39(a). 5. Servicing transfers. i.e., 39(b)(2) Content of the written notice. 1. Minimum requirements. 2. Format. 3. Delivery. Paragraph 39(b)(2)(iii). 1. Number of examples. 2. Brief description. Paragraph 39(b)(2)(iv). 1. Explanation of how the borrower may obtain more information about loss mitigation options. 39(c) Borrowers in bankruptcy. 1. Borrower's representative. See 2. Adapting requirements in bankruptcy. 39(c)(1) Borrowers in bankruptcy—Partial exemption. 1. Commencing a case. Paragraph 39(c)(1)(ii). 1. Availability of loss mitigation options. 2. Fair Debt Collections Practices Act. Exemption. et seq. ii. Example. Paragraph 39(c)(1)(iii). 1. Joint obligors. 39(c)(2) Resuming compliance. 1. Bankruptcy case revived. 39(d) Fair Debt Collection Practices Act—partial exemption. 1. Availability of loss mitigation options. 2. Early intervention communications under the FDCPA. et seq. Paragraph 39(d)(2). 1. Borrowers in bankruptcy. et seq. § 1024.40—Continuity of Contact 40(a) In general. 1. Delinquent borrower. 2. Assignment of personnel. 3. Delinquency. § 1024.41—Loss Mitigation Procedures 41(b) Receipt of a loss mitigation application. 1. Successors in interest. ii. If a servicer receives a loss mitigation application from a potential successor in interest and elects not to review and evaluate the loss mitigation application before confirming that person's identity and ownership interest in the property, the servicer must preserve the loss mitigation application and all documents submitted in connection with the application, and, upon such confirmation, the servicer must review and evaluate the loss mitigation application in accordance with the procedures set forth in § 1024.41 if the property is the confirmed successor in interest's principal residence and the procedures set forth in § 1024.41 are otherwise applicable. For purposes of § 1024.41, the servicer must treat the loss mitigation application as if it had been received on the date that the servicer confirmed the successor in interest's status. If the loss mitigation application is incomplete at the time of confirmation because documents submitted by the successor in interest became stale or invalid after they were submitted and confirmation is 45 days or more before a foreclosure sale, the servicer must identify the stale or invalid documents that need to be updated in a notice pursuant to § 1024.41(b)(2). 41(b)(1) Complete loss mitigation application. 1. In general. i. Assume a particular loss mitigation option is only available for borrowers whose mortgage loans were originated before a specific date. Once a servicer receives documents or information confirming that a mortgage loan was originated after that date, the servicer may stop collecting documents or information from the borrower that the servicer would use to evaluate the borrower for that loss mitigation option, but the servicer must continue its efforts to obtain documents and information from the borrower that the servicer requires to evaluate the borrower for all other available loss mitigation options. ii. Assume applicable requirements established by the owner or assignee of the mortgage loan provide that a borrower is ineligible for home retention loss mitigation options if the borrower states a preference for a short sale and provides evidence of another applicable hardship, such as military Permanent Change of Station orders or an employment transfer more than 50 miles away. If the borrower indicates a preference for a short sale or, more generally, not to retain the property, the servicer may not stop collecting documents and information from the borrower pertaining to available home retention options solely because the borrower has indicated such a preference, but the servicer may stop collecting such documents and information once the servicer receives information confirming that the borrower has an applicable hardship under requirements established by the owner or assignee, such as military Permanent Change of Station orders or employment transfer. 2. When an inquiry or prequalification request becomes an application. 3. Examples of inquiries that are not applications. i. A borrower calls to ask about loss mitigation options and servicer personnel explain the loss mitigation options available to the borrower and the criteria for determining the borrower's eligibility for any such loss mitigation option. The borrower does not, however, provide any information that a servicer would consider for evaluating a loss mitigation application. ii. A borrower calls to ask about the process for applying for a loss mitigation option but the borrower does not provide any information that a servicer would consider for evaluating a loss mitigation application. 4. Although a servicer has flexibility to establish its own requirements regarding the documents and information necessary for a loss mitigation application, the servicer must act with reasonable diligence to collect information needed to complete the application. A servicer must request information necessary to make a loss mitigation application complete promptly after receiving the loss mitigation application. Reasonable diligence for purposes of § 1024.41(b)(1) includes, without limitation, the following actions: i. A servicer requires additional information from the applicant, such as an address or a telephone number to verify employment; the servicer contacts the applicant promptly to obtain such information after receiving a loss mitigation application; ii. Servicing for a mortgage loan is transferred to a servicer and the borrower makes an incomplete loss mitigation application to the transferee servicer after the transfer; the transferee servicer reviews documents provided by the transferor servicer to determine if information required to make the loss mitigation application complete is contained within documents transferred by the transferor servicer to the servicer; and iii. A servicer offers a borrower a short-term payment forbearance program or a short-term repayment plan based on an evaluation of an incomplete loss mitigation application and provides the borrower the written notice pursuant to § 1024.41(c)(2)(iii). If the borrower remains in compliance with the short-term payment forbearance program or short-term repayment plan, and the borrower does not request further assistance, the servicer may suspend reasonable diligence efforts until near the end of the payment forbearance program or repayment plan. However, if the borrower fails to comply with the program or plan or requests further assistance, the servicer must immediately resume reasonable diligence efforts. Near the end of a short-term payment forbearance program offered based on an evaluation of an incomplete loss mitigation application pursuant to § 1024.41(c)(2)(iii), and prior to the end of the forbearance period, if the borrower remains delinquent, a servicer must contact the borrower to determine if the borrower wishes to complete the loss mitigation application and proceed with a full loss mitigation evaluation. 5. Information not in the borrower's control. 41(b)(2)Review of loss mitigation application submission. 41(b)(2)(i) Requirements. 1. Foreclosure sale not scheduled. Paragraph 41(b)(2)(i)(B). 1. Later discovery of additional information required to evaluate application. 41(b)(2)(ii) Time period disclosure. 1. Thirty days is generally reasonable. 2. No later than the next milestone. i. The date by which any document or information submitted by a borrower will be considered stale or invalid pursuant to any requirements applicable to any loss mitigation option available to the borrower; ii. The date that is the 120th day of the borrower's delinquency; iii. The date that is 90 days before a foreclosure sale; iv. The date that is 38 days before a foreclosure sale. 3. Seven-day minimum. 41(b)(3) Determining Protections. 1. Foreclosure sale not scheduled. 2. Foreclosure sale re-scheduled. 41(c) Evaluation of loss mitigation applications. 41(c)(1) Complete loss mitigation application. 1. Definition of “evaluation.” 2. Loss mitigation options available to a borrower. i. A servicer services mortgage loans for two different owners or assignees of mortgage loans. Those entities each have different loss mitigation programs. loss mitigation options not offered by the owner or assignee of the borrower's mortgage loan are not available to the borrower; or ii. The owner or assignee of a borrower's mortgage loan has established pilot programs, temporary programs, or programs that are limited by the number of participating borrowers. Such loss mitigation options are available to a borrower. However, a servicer evaluates whether a borrower is eligible for any such program consistent with criteria established by an owner or assignee of a mortgage loan. For example, if an owner or assignee has limited a pilot program to a certain geographic area or to a limited number of participants, and the servicer determines that a borrower is not eligible based on any such requirement, the servicer shall inform the borrower that the investor requirement for the program is the basis for the denial. 3. Offer of a non-home retention option. 4. Other notices. 41(c)(2) Incomplete loss mitigation application evaluation. 41(c)(2)(i) In general. 1. Offer of a loss mitigation option without an evaluation of a loss mitigation application. 2. Servicer discretion. 41(c)(2)(ii) Reasonable time. 1. Significant period of time. 41(c)(2)(iii) Short-term loss mitigation options. 1. Short-term payment forbearance program. 2. Short-term loss mitigation options and incomplete applications. see 3. Short-term loss mitigation options and complete applications. 4. Short-term repayment plan. 5. Specific payment terms and duration. General requirement. ii. Disclosure of payment amounts that may change. 6. Timing of notice. 41(c)(2)(iv) Facially complete application. 1. Reasonable opportunity. 2. Borrower fails to complete the application. 41(c)(3) Notice of complete application. Paragraph 41(c)(3)(i). 1. Completion date. See 2. First notice or filing. 1 2 3. Additional notices. See 41(c)(4) Information not in the borrower's control. 41(c)(4)(i) Diligence requirements. 1. During the first 30 days following receipt of a complete loss mitigation application. i. Promptly upon determining that the servicer requires the documents or information to determine which loss mitigation options, if any, the servicer will offer the borrower; and ii. By a date that will enable the servicer to complete the evaluation within 30 days of receiving the complete loss mitigation application, as set forth in § 1024.41(c)(1), to the extent practicable. 2. More than 30 days following receipt of a complete loss mitigation application. 41(c)(4)(ii) Effect in case of delay. 1. Third-party delay. 2. Offers not prohibited. 2 2 41(d) Denial of loan modification options. 1. Investor requirements. 2. Net present value calculation. 3. Determination not to offer a loan modification option constitutes a denial. 4. Reasons listed. 41(f) Prohibition on foreclosure referral. 1. Prohibited activities. i. Where foreclosure procedure requires a court action or proceeding, a document is considered the first notice or filing if it is the earliest document required to be filed with a court or other judicial body to commence the action or proceeding (e.g., a complaint, petition, order to docket, or notice of hearing). ii. Where foreclosure procedure does not require an action or court proceeding, such as under a power of sale, a document is considered the first notice or filing if it is the earliest document required to be recorded or published to initiate the foreclosure process. iii. Where foreclosure procedure does not require any court filing or proceeding, and also does not require any document to be recorded or published, a document is considered the first notice or filing if it is the earliest document that establishes, sets, or schedules a date for the foreclosure sale. iv. A document provided to the borrower but not initially required to be filed, recorded, or published is not considered the first notice or filing on the sole basis that the document must later be included as an attachment accompanying another document that is required to be filed, recorded, or published to carry out a foreclosure. 41(g) Prohibition on foreclosure sale. 1. Dispositive motion. 2. Proceeding with the foreclosure process. 3. Interaction with foreclosure counsel. 4. Loss mitigation applications submitted 37 days or less before foreclosure sale. 5. Conducting a sale prohibited. Paragraph 41(g)(3). 1. Short sale listing period. 2. Short sale agreement. 41(h) Appeal process. Paragraph 41(h)(3). 1. Supervisory personnel. 41(i) Duplicative requests. 1. Applicability of loss mitigation protections. 2. Servicing transfers. 41(k) Servicing transfers. 1. Pending loss mitigation application. 41(k)(1) In general. 41(k)(1)(i) Timing of compliance. 1. Obtaining loss mitigation documents and information. ii. A transferee servicer must, in accordance with § 1024.41(b)(1), exercise reasonable diligence to complete a loss mitigation application, including a facially complete application, received as a result of a transfer. In the transfer context, reasonable diligence includes ensuring that a borrower is informed of any changes to the application process, such as a change in the address to which the borrower should submit documents and information to complete the application, as well as ensuring that the borrower is informed about which documents and information are necessary to complete the application. iii. A borrower may provide documents and information necessary to complete an application to a transferor servicer after the transfer date. Consistent with policies and procedures maintained pursuant to § 1024.38(b)(4), the transferor servicer must timely transfer, and the transferee servicer must obtain, such documents and information. 2. Determination of rights and protections. See 3. Duplicative notices not required. 41(k)(1)(ii) Transfer date defined. 1. Transfer date. 41(k)(2) Acknowledgment notices. 41(k)(2)(ii) Prohibitions. 1. Examples of prohibitions. i. If the transferor servicer receives the borrower's initial loss mitigation application when the borrower's mortgage loan is 101 days delinquent, the borrower's mortgage loan would be 123 days delinquent on October 23, the date the transferee servicer provides the notice required by § 1024.41(b)(2)(i)(B). Pursuant to § 1024.41(k)(2)(ii)(A), the transferee servicer cannot make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process until after November 22, the reasonable date disclosed under § 1024.41(b)(2)(ii), and then only if the borrower has not submitted a complete application by that date. ii. If the transferor servicer receives the borrower's initial loss mitigation application 55 days before the foreclosure sale, the date that the transferee servicer provides the notice required by § 1024.41(b)(2)(i)(B), October 23, is 33 days before the foreclosure sale. Pursuant to § 1024.41(k)(2)(ii)(B), the transferee servicer must comply with § 1024.41(c), (d), and (g) if the borrower submits a complete loss mitigation application on or before November 22, the reasonable date disclosed under § 1024.41(b)(2)(ii). 2. Applicability of loss mitigation provisions. 3. Reasonable date when no milestones remain. 41(k)(3) Complete loss mitigation applications pending at transfer. 1. Additional information or corrections to a previously submitted document. 2. Applications first complete upon transfer. See 41(k)(4) Applications subject to appeal process. 1. Obtaining appeal. 2. Servicer unable to determine appeal. 41(k)(5) Pending loss mitigation offers. 1. Obtaining evidence of borrower acceptance. Appendix MS to Part 1024—Mortgage Servicing Model Forms and Clauses 1. In general. 2. Permissible changes. i. Use of “borrower” and “servicer” instead of pronouns. ii. Substitution of the words “lender” and “servicer” for each other. iii. Addition of graphics or icons, such as the servicer's corporate logo. iv. Modifications to remove language that could suggest liability under the mortgage loan agreement if such language is not applicable. For example, in the case of a confirmed successor in interest who has not assumed the mortgage loan obligation under State law and is not otherwise liable on the mortgage loan obligation, this could include: A. Use of “the mortgage loan” or “this mortgage loan” instead of “your mortgage loan” and “the monthly payments” instead of “your monthly payments.” B. Use of “Payments due on or after [Date] may be sent to” instead of “Send all payments due on or after [Date] to” in notices of transfer. C. Use of “We will charge the loan account” instead of “You must pay us” in notices relating to force-placed insurance. Appendix MS-3—Model Force-Placed Insurance Notice Forms 1. Where the model forms MS-3(A), MS-3(B), MS-3(C), and MS-3(D) use the term “hazard insurance,” the servicer may substitute “hazard insurance” with “homeowners' insurance” or “property insurance.” Appendix MS-4—Model Clauses for the Written Early Intervention Notice 1. Model MS-4(A). 2. Model MS-4(B). 3. Model MS-4(C). [78 FR 10887, Feb. 14, 2013, as amended at 78 FR 44717, July 24, 2013; 78 FR 60438, Oct. 1, 2013; 78 FR 63004, 63005, Oct. 23, 2013; 81 FR 72376, Oct. 19, 2016; 82 FR 30948, July 5, 2017; 86 FR 34900, June 30, 2021; 88 FR 16542, Mar. 20, 2023; 90 FR 20793, May 16, 2025]

12 CFR Part 1024 — Real Estate Settlement Procedures Act (Regulation X)

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