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#349563 - 04/21/05 02:52 PM RESPA - Simo Closing
Anonymous
Unregistered

We do a simo close for example an 80-10-10 transaction, that is 80% purchase-10% Equity Line for down payment and 10% cash down. We have a closing agent prepare the HUD-1 and we prepare a HUD-1A for the Equity Line. It is my understanding that an Equity Line is exempt from the RESPA HUD-1A requirements as long as we have given our upfront early disclosures. My question, if we give a HUD-1A and it is incorrect or we do not have a copy of it in our file (not returned from the closing agent) do we have a RESPA violation for an incorrect disclosure?

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Lending Compliance
#349564 - 04/22/05 06:14 PM Re: RESPA - Simo Closing
Anonymous
Unregistered

When referring to the home equity line of credit, you are correct that RESPA does not apply if early disclosures are given correctly.
So, not having a copy of any HUD would not be a RESPA violation. And if RESPA is not applicable, I would not keep a copy of any HUD. You never know about some examiners and whether or not they will write you up for not really knowing when RESPA does/does not apply. Why take chances?

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#349565 - 04/22/05 06:40 PM Re: RESPA - Simo Closing
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
Quote:

You never know about some examiners and whether or not they will write you up for not really knowing when RESPA does/does not apply. Why take chances?





I understand your concern, but there is no violation for using a HUD 1-A Settlement Statement in this instance. In fact RESPA's Appendix A encourages its use.

If you use it, it should be accurate. But since it is not required I would fight any citation a regulator would try to give me as long as my other disclosures were accurate.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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