(a) Use by settlement
agent. The settlement agent shall use the HUD-1 settlement statement
in every settlement involving a federally related mortgage loan in
which there is a borrower and a seller. For transactions in which
there is a borrower and no seller, such as refinancing loans or subordinate
lien loans, the HUD-1 may be utilized by using the borrower’s side
of the HUD-1 statement. Alternatively, the form HUD-1A may be used
for these transactions. The HUD-1 or HUD-1A may be modified as permitted
under this part. Either the HUD-1 or the HUD-1A, as appropriate, shall
be used for every RESPA-covered transaction, unless its use is specifically
exempted. The use of the HUD-1 or HUD-1A is exempted for open-end
lines of credit (home-equity plans) covered by the Truth in Lending
Act and Regulation Z.
6-1390.1
(b) Charges to be stated. The settlement agent shall complete the
HUD-1 or HUD-1A, in accordance with the instructions set forth in
Appendix A to this part. The loan originator must transmit to the
settlement agent all information necessary to complete the HUD-1 or
HUD-1A.
(1) In general. The settlement agent shall
state the actual charges paid by the borrower and seller on the HUD-1,
or by the borrower on the HUD-1A. The settlement agent must separately
itemize each third party charge paid by the borrower and seller. All
origination services performed by or on behalf of the loan originator
must be included in the loan originator’s own charge. Administrative
and processing services related to title services must be included
in the title underwriter’s or title agent’s own charge. The amount
stated on the HUD-1 or HUD-1A for any itemized service cannot exceed
the amount actually received by the settlement service provider for
that itemized service, unless the charge is an average charge in accordance
with paragraph (b)(2) of this section.
(2) Use of average charge.
(i) The average charge for a settlement
service shall be no more than the average amount paid for a settlement
service by one settlement service provider to another settlement service
provider on behalf of borrowers and sellers for a particular class
of transactions involving federally related mortgage loans. The total
amounts paid by borrowers and sellers for a settlement service based
on the use of an average charge may not exceed the total amounts paid
to the providers of that service for the particular class of transactions.
(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). A violation of any of the requirements
of this section will be deemed to be a violation of section 4 of RESPA.
An inadvertent or technical error in completing the HUD-1 or HUD-1A
shall not be deemed a violation of section 4 of RESPA if a revised
HUD-1 or HUD-1A is provided in accordance with the requirements of
this section within 30 calendar days after settlement.
