We just attended a training session and the attorney said something that doesn't sound right. He said that if a bank accepts a HUD-1 Settlement Statement from an attorney then the loan is now subject to RESPA even if it wasn't subject before due to an exemption (such as business purpose loan). He said that the bank can be fined for mistakes made on the form as well as for not complying with the other requirements of RESPA.

Is this true? I didn't see anything in 3500.8 so I'm confused.

I can very well see where overdislosure done incorrectly could hold you accountable in a court of law. However, it would not make you liable for other areas of RESPA, such as GFE, etc.