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Servicing Statement Language
Question: I've read the HUD statement in the Federal Register that the transfer of servicing statement that we provide to applicants can be a short statement reflecting the language that is actually in the act. We'd like to do that. But what do we say to the examiner who points to the regulation that is still on the books?
Answer: The answer should be simple: the law trumps the older regulation. Congress specifically passed the law to change and simplify the transfer of servicing notice. Congress intended the old and very long form to go away. Unfortunately, HUD hasn't placed this particular regulatory clean-up project on its priority list. And also unfortunately, some examiners do not understand that the law made the regulation invalid even though HUD hasn't bothered to take it off the books. Our advice is that if you choose to use the shorter notice that is consistent with the act, be ready to have a lawyer explain the facts of life and law to a dubious examiner.
Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 9, 9/04
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