Affiliated business disclosure signature requirement

Question: Is there a signature requirement for the affiliated business disclosure? I thought the lender was supposed to have the customer sign the notice, but I can't find the requirement.

Answer: Yes, there is a signature requirement. You must have the customer sign and acknowledge the notice at the time that you provide the notice. You can't find the requirement because HUD buried it in the appendix - a favorite practice at HUD. Requirements for the HUD-1 are handled much the same way in the regulation. Specific instructions are contained in the Appendix and the regulation text simply states that the form must be completed in a manner consistent with the instructions in the Appendix.

In the case of the Affiliated Business Arrangement notice, the regulation directs the party making the referral to provide the consumer with a "written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement set forth in Appendix D of this part?" The model form in Appendix D contains a signature line which states the customer's acknowledgment and understanding.

When HUD introduced this form, by publication in the Federal Register, HUD stated in the explanatory material that the model format was required, including the signature line. In effect, the placement of the signature line on the model form constituted a requirement.

The problem with this approach is that HUD has placed similar signature lines on other forms without stating anywhere - even in the Federal Register document - that a customer signature would be required. The Good Faith Estimate example shows a signature line. However, neither the regulation nor the appendix nor any other language indicate that a signature is required on the GFE. As a practical matter, it is useful to collect signatures from customers indicating that they have received a copy of the form. The signature is quite persuasive with examiners. However, for purposes of RESPA, the only required signatures are the transfer of servicing notice and the affiliated business arrangement notice.

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 11, 9/01