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#478660 - 01/05/06 03:01 PM Servicing Disclosure Statement Calculations
ChristinaA Offline
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Joined: Nov 2005
Posts: 68
When calculating the % of loans transferred for the servicing disclosure statement, do we also include the construction loans that were sold & paid in full where there was no servicing transfer involved?

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#478661 - 01/05/06 03:16 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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No. BTW, the percentages are no longer required.


BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS

CA 03-9

September 10, 2003

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS SECTIONS:

SUBJECT: Revised Examiner Guidance on Mortgage Loan Servicing Disclosure Statements Required Under the Real Estate Settlement Procedures Act ("RESPA")

In 1990, Congress amended RESPA to include a disclosure that informs borrowers that their loan or the servicing of their loan may be sold (12 USC 2605, Public Law 101-625 section 6, 11/28/1990). In 1996, Congress again amended RESPA to simplify the mortgage servicing disclosure (Public Law 104-208, section 2103(a), September 30, 1996). The 1996 amendment to RESPA eliminated the historical data provisions and the acknowledgement requirement for mortgage servicing transfer notices.

The Department of Housing and Urban Development (HUD) proposed an amendment to Regulation X to implement the 1996 amendments to section 6 of the statute on May 9, 1997 (FR Vol. 62, No. 90). However, HUD never finalized the proposed regulation. Consequently, Regulation X (3500.21(b)) currently requires a detailed notice that includes historical percentages for a three-year period, as well as the applicant's acknowledgement.

HUD addressed the discrepancy between the RESPA statute and Regulation X in the supplementary information to the July 29, 2002 proposed revision of Regulation X (07/29/02, Vol. 67, No. 145, p. 49152) by stating:



The Department plans to finalize the 1997 proposed rule shortly. However, in the meantime, the Section 6 language in the statute may be provided in conjunction with the GFE instead of the language currently indicated in §3500.21 and Appendix MS-1.

Given HUD's stated position on this issue, Board staff has determined that examiners should implement the following guidance when reviewing loans for compliance with section 24 CFR 3500.21(b) of HUD's Regulation X. Effective immediately, examiners should not cite violations of the following sections of RESPA:


Reg. X/CARES
Acceptable Cite Description
X 21(b)(2) Mortgage servicing transfers - servicing disclosure statement -
must have applicant's acknowledgement portion
X 21(b)(3)(ii) Mortgage servicing transfers - servicing disclosure statement -
must have % of lender's loans assigned, sold, transferred
X 21(b)(3)(ii)(A) Mortgage servicing transfer notice - percentage of loans
transferred should be for the last 3 years, updated each year by
March 31, and calculated according to formula in reg
X 21(b)(3)(iii) Mortgage servicing transfer notice should include best estimate of
percentage of loans made in upcoming year that will be transferred
X 21(b)(3)v) Mortgage servicing transfers - servicing disclosure statement -
include written acknowledgement (& signature) of applicant


In addition, violations of the above five sections of Regulation X no longer should be referred to the Board as provided for in CA Letter 01-2 . Beginning on October 1, 2003, these five cites will be disabled on the CARES system.

Keep in mind that Regulation X still retains a mortgage servicing disclosure requirement. Specifically, examiners should determine that borrowers are given the following disclosures (as applicable):


Reg. X/CARES
Acceptable Cite Description
X 21(b)(1) Mortgage servicing transfers - servicing disclosure statement-
must be provided at time of application or within 3 business days
X 21(b)(3)(i) Mortgage servicing transfers - servicing disclosure statement -
must disclose whether servicing may be assigned, sold or
transferred

As a reminder, violations of the above two sections of Regulation X should continue to be cited and referred to the Board as provided for in CA Letter 01-2.

If you have any questions regarding this RESPA matter, they should be directed to the review examiner assigned to your district or to Tracy Anderson at (202) 736-1921.

Sincerely,
(signed)

Shawn McNulty
Associate Director



CA letters | 2003 Letters

--------------------------------------------------------------------------------

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#478662 - 01/05/06 03:34 PM Re: Servicing Disclosure Statement Calculations
ChristinaA Offline
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Joined: Nov 2005
Posts: 68
Does anyone have a sample of the revised servicing disclosure statement since we don't have to use the percentage anylonger?

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#478663 - 01/11/06 09:11 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
All you have to do is add a statement to your GFE:

We may assign, sell or transfer the servicing of your loan.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#478664 - 01/11/06 09:47 PM Re: Servicing Disclosure Statement Calculations
DDB Offline
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DDB
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Posts: 170
That's how it's been explained to me as well. The Fed Board's guidance seems to say that we no longer need to give anything for sections #2, #3, or the customer acknowledgement/signature, but we still need to cover section #1

However, the sample disclosure provided in Appendix MS-1 has some introductory paragraphs that explain the customers' rights to receive a notice 15 days before an actual transfer, for complaint resolution, and for legal judgment for damages and costs if the creditor violates RESPA. How does the Fed Board's guidance allow us to stop giving that information?
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#478665 - 01/11/06 10:05 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Keep in mind Appendix MS-1 is attached to HUD's Regulation X, RESPA which has not been updated to the Real Estate Settlement Procedures Act's amendment.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#478666 - 01/11/06 10:21 PM Re: Servicing Disclosure Statement Calculations
DDB Offline
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DDB
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Posts: 170
That's true. But did the change in the statute say that none of that other information is required anymore or just that we didn't need to give the estimates of the past and future transfer percentages? The guidance from the Fed Board is silent on the issue.
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#478667 - 01/12/06 01:41 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Real Estate Settlement Procedures Act 2605(a).
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#478668 - 01/12/06 01:57 PM Re: Servicing Disclosure Statement Calculations
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
That's pretty straightforward. Strange when that happens isn't it? Thanks Dan.
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#478669 - 01/18/06 08:15 PM Re: Servicing Disclosure Statement Calculations
Deena Offline
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Deena
Joined: Nov 2000
Posts: 2,701
PA
Quote:

All you have to do is add a statement to your GFE:

We may assign, sell or transfer the servicing of your loan.




Must this be included on the GFE or could the statement be provided either separately or on another document? (I realize that the GFE is the logical place for it, I'm just not sure that our software can accommodate that.)
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#478670 - 01/18/06 09:13 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
No. 2605(a) does not designate that it is to be given with the GFE.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#478671 - 01/18/06 09:27 PM Re: Servicing Disclosure Statement Calculations
Deena Offline
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Deena
Joined: Nov 2000
Posts: 2,701
PA
Thanks, Dan, that's what I thought, but I was afraid I had missed something somewhere else.
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#478672 - 01/19/06 01:33 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
For those interested I have put together a sample disclosure. The text of the disclosure follows. Feel free to copy and edit as needed. This disclosure is on our letter head.

Servicing Transfer Disclosure

This disclosure is being given in compliance with Section 2605(a) of the Real Estate Settlement Procedures Act (RESPA).

The Peoples State Bank may assign, sell or transfer the servicing of your loan to another servicer any time during the term of the loan.

Please contact us at the above address or telephone number if you have any questions concerning this disclosure.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#478673 - 03/07/06 09:31 PM Re: Servicing Disclosure Statement Calculations
Tocomply Offline
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Joined: Nov 2004
Posts: 650
Dan;

Who is your regulator. we have OTS and they informed us that the disclosure must be separate and the customer must sign it. They do not have to sign a GFE so they want to see a separate disclosure.

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#478674 - 03/07/06 09:36 PM Re: Servicing Disclosure Statement Calculations
rlcarey Online
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Galveston, TX
Your OTS examination team is behind the times. I would respectfully request of them that they run this by the their legal staff in their field or regional office.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#478675 - 03/07/06 09:40 PM Re: Servicing Disclosure Statement Calculations
rlcarey Online
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rlcarey
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Galveston, TX
Additionally, if you want to provide them a copy of the FRB stance that Dan cited above - you can find it here:

http://www.federalreserve.gov/boarddocs/caletters/2003/0309/caltr0309.htm
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#478676 - 05/16/06 12:41 PM Re: Servicing Disclosure Statement Calculations
RVFlyboy Offline
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RVFlyboy
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Soaring over Georgia
I have a question on timing. Are the timing requirements from Reg X 3500.21 still applicable for the initial Servicing Transfer Disclosure? It would seem so, because the revised statute still calls for the disclosure at the time of application. If this is true, then how can this be accomplished by putting the statement on the GFE as was advocated earlier in the thread? The GFE can be provided up to 3 business days after application even in the case of in-person applications.
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#478677 - 05/16/06 12:51 PM Re: Servicing Disclosure Statement Calculations
Dan Persfull Offline
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Dan Persfull
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Posts: 46,832
Bloomington, IN
Jim, I agree that 2605(a) still states the disclosure is required at the time of application. This is why the above disclosure I posted is a separate disclosure and is included in our application packets.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#478678 - 05/16/06 02:45 PM Re: Servicing Disclosure Statement Calculations
Peanut Offline
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Peanut
Joined: Jun 2003
Posts: 127
Midwest
I want to make sure that I'm clear on this. The Servicing Disclosure Statement does not have to be signed by the borrowers? Are most institutions foregoing the borrower’s signature on the disclosure or are signatures obtain as a matter of extra caution? Just curious what the general practice is in regard to signatures here.

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