Skip to content
BOL Conferences
Thread Options
#1719476 - 07/12/12 05:36 PM Commercial Loan & HUD 1
tic toc Offline
100 Club
Joined: May 2006
Posts: 138
Springfield IL
I need a quick response. I don't know why anyone would, but can a HUD1 be used for a commercial loan? This is a purchase of an Investment Property and our Policy is to do it as a commercial loan. (I know these do not come under RESPA, HMDA may apply plus a few other categories).

I was asked if we used a HUD1, are we in any violation?
_________________________
tic-toc, times a wastin!

Return to Top
RESPA
#1719480 - 07/12/12 05:39 PM Re: Commercial Loan & HUD 1 tic toc
#Just Jay Offline
10K Club
#Just Jay
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
No. You're fine.

If it is a simple commercial loan perhaps for a unsophisticated commercial borrower, a HUD may be a short quick way to help your borrower see the final picture so to speak.

You're fine. Breathe.
_________________________
I don't repeat gossip, so listen closely...

Return to Top
#1719486 - 07/12/12 05:54 PM Re: Commercial Loan & HUD 1 tic toc
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
HUD1's sans page 3 are very common for RE transactions, regardless of purpose.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1719501 - 07/12/12 06:24 PM Re: Commercial Loan & HUD 1 tic toc
#Just Jay Offline
10K Club
#Just Jay
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
Good point, RR. Forgot to add throw away page three.
_________________________
I don't repeat gossip, so listen closely...

Return to Top
#1719504 - 07/12/12 06:25 PM Re: Commercial Loan & HUD 1 tic toc
tic toc Offline
100 Club
Joined: May 2006
Posts: 138
Springfield IL
Thanks. As always, BOL comes through. And yes, we have used the HUD for commercial loans, but even this scenerio would scare the BOL GURUS!

I did some looking, can't help myself, since these loans are exempt, no violation, but being a financial transaction, all figures have to be correct and there is a possible citation for incorrect figures.

What brought up this question, was the fact all the seller's fees were being paid by the borrower and on the 1st page being debited from the sellers and credited to the borrower. Thus confusing the picture of a RESPA covered loan and not 1. Besides the fees they included were all incorrect.

I wanted to know where they were coming from, (or going to???)and the response was: the information, seller paid costs, were entered on ARTA, and just deferred to the borrower's side. Yeh Right! So I was put on the spot to validate what I was trying to get across. It's all wrong!

BREATHE!!!!!
Last edited by tic toc; 07/12/12 06:27 PM.
_________________________
tic-toc, times a wastin!

Return to Top
#1735717 - 08/28/12 02:17 PM Re: Commercial Loan & HUD 1 tic toc
Angela @ FNB Offline
New Poster
Angela @ FNB
Joined: Mar 2012
Posts: 24
Arkansas, USA
I have a semi-related question: I have a settlement agent who includes the HUD settlement statement on every loan - including business purpose loans not subject to RESPA. We don't mind the documentation, and the numbers are correct. However, we have been cited for naming the Bank as the provider, then disbursing money. We are now straight on the fact that we must disclose third-party providers, i.e. flood determination companies.

If a settlement agent uses the HUD form, on a loan not covered by RESPA, must it follow RESPA? For example, they cite the Bank as getting the flood determination money - which we did - but we are not the third-party provider. Even if the form is not required to be used, does it have to be correct if the agent uses it?

Thanks -
_________________________
AFS
Compliance, ALLL, Accounting,Community Banking

Not every day is meant for flying; reserve the cape for days you need it!

Return to Top
#1736067 - 08/29/12 12:07 PM Re: Commercial Loan & HUD 1 tic toc
KPOC Offline
Gold Star
KPOC
Joined: Jul 2012
Posts: 460
Greater Boston Area
In my opinion, yes. If you choose to use/provide forms and disclosures that are not required, you are still responsible for their accuracy. While the form itself is not required, accuracy is always required.

Return to Top
#1736070 - 08/29/12 12:22 PM Re: Commercial Loan & HUD 1 tic toc
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Why not tell the settlement agent to stop or you will take th bank's business elsewhere? If they need a form to lean on, they can create a simple sheet like the old HUD 1. You hire them, not the other way around.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#1736128 - 08/29/12 02:03 PM Re: Commercial Loan & HUD 1 tic toc
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
"We don't mind the documentation, and the numbers are correct. However, we have been cited for naming the Bank as the provider, then disbursing money."

I disagree. If RESPA does not apply, then you can't be cited for violations regardless of how you use the form. If the numbers are accurate, then move on and tell whoever is citing you for these types of violations to show you a law or regulation that addresses it.

Now if the numbers were wrong, then you might be misleading the customer and that would not be a good practice and could possibly lead to some sort of UDAAP citation or a contractual dispute. However, whether you show the ultimate recipient of a fee on a commercial loan(which is only a requirement of RESPA) is really a non-issue.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1736130 - 08/29/12 02:06 PM Re: Commercial Loan & HUD 1 Kathleen O. Blanchard
Rendar, CRCM Offline
Junior Member
Joined: Aug 2012
Posts: 38
Indiana
Originally Posted By: Kathleen B
Why not tell the settlement agent to stop or you will take th bank's business elsewhere? If they need a form to lean on, they can create a simple sheet like the old HUD 1. You hire them, not the other way around.


grin likes this idea
_________________________
I must confess that I feel like a monster
- Skillet

Return to Top
#1738064 - 09/05/12 05:04 PM Re: Commercial Loan & HUD 1 rlcarey
Indy Banker Offline
Platinum Poster
Joined: Aug 2010
Posts: 528
Originally Posted By: rlcarey
"We don't mind the documentation, and the numbers are correct. However, we have been cited for naming the Bank as the provider, then disbursing money."

I disagree. If RESPA does not apply, then you can't be cited for violations regardless of how you use the form. If the numbers are accurate, then move on and tell whoever is citing you for these types of violations to show you a law or regulation that addresses it.

Now if the numbers were wrong, then you might be misleading the customer and that would not be a good practice and could possibly lead to some sort of UDAAP citation or a contractual dispute. However, whether you show the ultimate recipient of a fee on a commercial loan(which is only a requirement of RESPA) is really a non-issue.


Yes, I'd also like to know what regulation the examiners are "citing" as being violated since RESPA doesn't apply in this case. I agree with the UDAAP angle if the numbers are wrong - although that could apply to just about any transaction that takes place within the bank. Speaking of UDAAP (sorry I digress), how many heard the news that a very popular Mexican-themed restaurant has been "rounding up" customer orders to avoid giving back pennies for change? Of course, no Government action on that - just disgruntled customers - but can you imagine the fire and brimstone that would rain down from DC if a bank did that!?!

Return to Top

Moderator:  QCL