They're probably referring to this FAQ:
HUD-1 – Page 2
1) Q: On which lines of page 2 of the HUD-1 is a person not required to be identified?
A: The general rule is that the names of all persons that received payment for each separately identified settlement service must be identified on page 2 of the HUD-1. There is not a requirement to identify persons on the following lines: 801, 802, 803, 901, the 1000 series, 1101, 1105, 1106, 1201, 1202, 1203, 1204, 1205 and 1301.
I don't think it's a "violation" if you indicate who the payment goes to on those lines though - it's just not required.
Opinions expressed are mine and not necessarily those of my employer.