servicing disclosures

We have a lot of brokered loans and the brokers do not handle any disclosures. Since this is the case, we are providing the servicing disclosure at closing. It is this a violation?

Yes.

Real Estate Settlement Procedures Act

2605: Servicing of mortgage loans and administration of escrow accounts (01/06/03)

(a) Disclosure to applicant relating to assignment, sale, or transfer of loan servicing

Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.

Okay....this is what I was told word for word by our VP of lending. Thoughts? I want to make sure I am correct here.



"Brokers are not lenders...they cannot commit, lock in rates or close loans in their name, except FHA Correspondents. They do not "make loans". I believe it has to come from the Lender, not a Broker who can neither lend or service."

Look at the RESPA Reg X definition of "lender". Then look at 3500.21(b). If the broker is not closing in their name then the disclosure requirement for this disclosure does fall to the bank. But the timing requirement for disclosure is within 3 business days from the date your bank received the application, not at closing as your original post said was your practice. There are other disclosures that may be required at that point (within 3 business days) as well, such as the Good Faith Estimate, Settlement Costs booklet, early TIL, etc.