HUD's Reg X
Sec. 3500.2 Definitions.
(a) Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are
used in accordance with their statutory meaning unless otherwise defined
in paragraph (b) of this section or elsewhere in this part.
(b) Other terms. As used in this part:
Application means the submission of a borrower's financial information in anticipation of a credit decision relating to a federally related mortgage loan, which shall include the borrower's name, the borrower's monthly income, the borrower's social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator. An application may either be in writing or electronically submitted, including a written record of an oral application.
Balloon payment has the same meaning as “balloon payment” under Regulation Z (12 CFR part 226).
Business day means a day on which the offices of the business entity
are open to the public for carrying on substantially all of the entity's
Changed circumstances means: (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 means, in the case of property improvement loans, a seller,
contractor, or supplier of goods or services. In the case of
manufactured home loans, “dealer” means one who engages in the
business of manufactured home retail sales.
Dealer loan or dealer consumer credit contract means, generally, any
arrangement in which a dealer assists the borrower in obtaining a
federally related mortgage loan from the funding lender and then assigns
the dealer's legal interests to the funding lender and receives the net
proceeds of the loan. The funding lender is the lender for the purposes
of the disclosure requirements of this part. If a dealer is a
“creditor” as defined under the definition of “federally related
mortgage loan” in this part, the dealer is the lender for purposes of
Effective date of transfer is defined in section 6(i)(1) of RESPA
(12 U.S.C. 2605(i)(1)). In the case of a home equity conversion mortgage
or reverse mortgage as referenced in this section, the effective date of
transfer is the transfer date agreed upon by the transferee servicer and
the transferor servicer.
Federally related mortgage loan or mortgage loan means as follows:
(1) Any loan (other than temporary financing, such as a construction
(i) That is secured by a first or subordinate lien on residential
real property, including a refinancing of any secured loan on
residential real property upon which there is either:
(A) Located or, following settlement, will be constructed using
proceeds of the loan, a structure or structures designed principally for
occupancy of from one to four families (including individual units of
condominiums and cooperatives and including any related interests, such
as a share in the cooperative or right to occupancy of the unit); or
(B) Located or, following settlement, will be placed using proceeds
of the loan, a manufactured home; and
(ii) For which one of the following paragraphs applies. The loan:
(A) Is made in whole or in part by any lender that is either
regulated by or whose deposits or accounts are insured by any agency of
the Federal Government;
(B) Is made in whole or in part, or is insured, guaranteed,
supplemented, or assisted in any way:
(1) By the Secretary or any other officer or agency of the Federal
(2) Under or in connection with a housing or urban development
program administered by the Secretary or a housing or related program
administered by any other officer or agency of the Federal Government;
(C) Is intended to be sold by the originating lender to the Federal
National Mortgage Association, the Government National Mortgage
Association, the Federal Home Loan Mortgage Corporation (or its
successors), or a financial institution from which the loan is to be
purchased by the Federal Home Loan Mortgage Corporation (or its
(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
(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 or GFE means an estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information, based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed in §3500.7 and prepared in accordance with the Instructions in Appendix C to this part.
HUD-1 or HUD-1A settlement statement (also HUD-1 or HUD-1A) means
the statement that is prescribed by the Secretary in this part for
setting forth settlement charges in connection with either the purchase
or the refinancing (or other subordinate lien transaction) of 1- to 4-
family residential property.
Lender means, generally, the secured creditor or creditors named in
the debt obligation and document creating the lien. For loans originated
by a mortgage broker that closes a federally related mortgage loan in
its own name in a table funding transaction, the lender is the person to
whom the obligation is initially assigned at or after settlement. A
lender, in connection with dealer loans, is the lender to whom the loan
is assigned, unless the dealer meets the definition of creditor as
defined under “federally related mortgage loan” in this section. See
also Sec. 3500.5(b)(7), secondary market transactions.
Loan originator means a lender or mortgage broker.
Managerial employee means an employee of a settlement service
provider who does not routinely deal directly with consumers, and who
either hires, directs, assigns, promotes, or rewards other employees or
independent contractors, or is in a position to formulate, determine, or
influence the policies of the employer. Neither the term “managerial
employee” nor the term “employee” includes independent contractors,
but a managerial employee may hold a real estate brokerage or agency
license. [See Note below]
Manufactured home is defined in Sec. 3280.2 of this title.
Mortgage broker means a person (not an employee of a lender) or entity that renders origination services and serves as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan, including such a person or entity that closes the loan in its own name in a table funded transaction. A loan correspondent approved under 24 CFR 202.8 for Federal Housing Administration programs is a mortgage broker for purposes of this part.
Mortgaged property means the real property that is security for the
federally related mortgage loan.
Origination service means any service involved in the creation of a mortgage loan, including but not limited to the taking of the loan application, loan processing, and the underwriting and funding of the loan, and the processing and administrative services required to perform these functions.
Person is defined in section 3(5) of RESPA (12 U.S.C. 2602(5)).
Prepayment penalty has the same meaning as “prepayment penalty” under Regulation Z (12 CFR part 226).
Public Guidance Documents means documents that HUD has published in
the Federal Register, and that it may amend from time-to-time by
publication in the Federal Register. These documents are also available
from HUD at the address indicated in 24 CFR 3500.3.
Refinancing means a transaction in which an existing obligation that
was subject to a secured lien on residential real property is satisfied
and replaced by a new obligation undertaken by the same borrower and
with the same or a new lender. The following shall not be treated as a
refinancing, even when the existing obligation is satisfied and replaced
by a new obligation with the same lender (this definition of “refinancing” as to transactions
with the same lender is similar to Regulation Z, 12 CFR 226.20(a)):
(1) A renewal of a single payment obligation with no change in the
(2) A reduction in the annual percentage rate as computed under the
Truth in Lending Act with a corresponding change in the payment
(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 means the regulations issued by the Board of Governors
of the Federal Reserve System (12 CFR part 226) to implement the Federal
Truth in Lending Act (15 U.S.C. 1601 et seq.), and includes the
Commentary on Regulation Z.
Required use means a situation in which a person must use a
particular provider of a settlement service in order to have access to
some distinct service or property, and the person will pay for the
settlement service of the particular provider or will pay a charge
attributable, in whole or in part, to the settlement service. However,
the offering of a package (or combination of settlement services) or the
offering of discounts or rebates to consumers for the purchase of
multiple settlement services does not constitute a required use. Any
package or discount must be optional to the purchaser. The discount must
be a true discount below the prices that are otherwise generally
available, and must not be made up by higher costs elsewhere in the
RESPA means the Real Estate Settlement Procedures Act of 1974, 12
U.S.C. 2601 et seq.
Servicer means the person responsible for the servicing of a
mortgage loan (including the person who makes or holds a mortgage loan
if such person also services the mortgage loan). The term does not
(1) The Federal Deposit Insurance Corporation (FDIC) or the
Resolution Trust Corporation (RTC), in connection with assets acquired,
assigned, sold, or transferred pursuant to section 13(c) of the Federal
Deposit Insurance Act or as receiver or conservator of an insured
depository institution; and
(2) The Federal National Mortgage Corporation (FNMA); the Federal
Home Loan Mortgage Corporation (Freddie Mac); the RTC; the FDIC; HUD,
including the Government National Mortgage Association (GNMA) and the
Federal Housing Administration (FHA) (including cases in which a
mortgage insured under the National Housing Act (12 U.S.C. 1701 et seq.)
is assigned to HUD); the National Credit Union Administration (NCUA);
the Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA); and the Department of Veterans Affairs (VA), in any case
in which the assignment, sale, or transfer of the servicing of the
mortgage loan is preceded by termination of the contract for servicing
the loan for cause, commencement of proceedings for bankruptcy of the
servicer, or commencement of proceedings by the FDIC or RTC for
conservatorship or receivership of the servicer (or an entity by which
the servicer is owned or controlled).
Servicing means receiving any scheduled periodic payments from a
borrower pursuant to the terms of any mortgage loan, including amounts
for escrow accounts under section 10 of RESPA (12 U.S.C. 2609), and
making the payments to the owner of the loan or other third parties of
principal and interest and such other payments with respect to the
amounts received from the borrower as may be required pursuant to the
terms of the mortgage servicing loan documents or servicing contract. In
the case of a home equity conversion mortgage or reverse mortgage as
referenced in this section, servicing includes making payments to the
Settlement means the process of executing legally binding documents
regarding a lien on property that is subject to a federally related
mortgage loan. This process may also be called “closing” or “escrow”
in different jurisdictions.
Settlement service means any service provided in connection with a
prospective or actual settlement, including, but not limited to, any one
or more of the following:
(1) Origination of a federally related mortgage loan (including, but
not limited to, the taking of loan applications, loan processing, and
the underwriting and funding of such loans);
(2) Rendering of services by a mortgage broker (including
counseling, taking of applications, obtaining verifications and
appraisals, and other loan processing and origination services, and
communicating with the borrower and lender);
(3) Provision of any services related to the origination, processing
or funding of a federally related mortgage loan;
(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
(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
(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
(15) Provision of any other services for which a settlement service
provider requires a borrower or seller to pay.
Special information booklet means the booklet prepared by the
Secretary pursuant to section 5 of RESPA (12 U.S.C. 2604) to help
persons understand the nature and costs of settlement services. The
Secretary publishes the form of the special information booklet in the
Federal Register. The Secretary may issue or approve additional booklets
or alternative booklets by publication of a Notice in the Federal
State means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, and any territory or
possession of the United States.
Table funding means a settlement at which a loan is funded by a
contemporaneous advance of loan funds and an assignment of the loan to
the person advancing the funds. A table-funded transaction is not a
secondary market transaction (see Sec. 3500.5(b)(7)).
Third party means a settlement service provider other than a loan originator.
Title company means any institution, or its duly authorized agent,
that is qualified to issue title insurance.
Title service means any service involved in the provision of title insurance (lender's or owner's policy), including but not limited to: title examination and evaluation; preparation and issuance of title commitment; clearance of underwriting objections; preparation and issuance of a title insurance policy or policies; and the processing and administrative services required to perform these functions. The term also includes the service of conducting a settlement.
Tolerance means the maximum amount by which the charge for a category or categories of settlement costs may exceed the amount of the estimate for such category or categories on a GFE.
Special NOTE: On June 7, 1996, Sec. 3500.2(b)
was amended by adding a definition of “managerial employee”, effective
Oct. 7, 1996. At 61 FR 51782, Oct. 4, 1996, the effective date was
delayed until further notice.