No Job Name

Regulation X

Real Estate Settlement Procedures Act

The Real Estate Settlement Procedures Act of 1974

(RESPA) (12 U.S.C. 2601 et seq.) (the act) became

effective on June 20, 1975. The act requires

lenders, mortgage brokers, or servicers of home

loans to provide borrowers with pertinent and

timely disclosures regarding the nature and costs

of the real estate settlement process. The act also

prohibits specific practices, such as kickbacks,

and places limitations upon the use of escrow

accounts. The Department of Housing and Urban

Development (HUD) originally promulgated Regu-

lation X, which implements RESPA.

Congress has amended RESPA significantly

since its enactment. The National Affordable Hous-

ing Act of 1990 amended RESPA to require

detailed disclosures concerning the transfer, sale,

or assignment of mortgage servicing. It also

requires disclosures for mortgage escrow ac-

counts at closing and annually thereafter, itemizing

the charges to be paid by the borrower and what is

paid out of the account by the servicer.

In October 1992, Congress amended RESPA to

cover subordinate lien loans.

Congress, when it enacted the Economic Growth

and Regulatory Paperwork Reduction Act of 1996,

further amended RESPA to clarify certain defini-

tions including “controlled business arrangement,”

which was changed to “affiliated business arrange-

ment.” The changes also reduced the disclosures

under the mortgage servicing provisions of RESPA.

In 2008, HUD issued a RESPA Reform Rule (73

Fed. Reg. 68204, November 17, 2008) that in-

cluded substantive and technical changes to the

existing RESPA regulations and different implemen-

tation dates for various provisions. Substantive

changes included a standard Good Faith Estimate

form and a revised HUD-1 Settlement Statement

that were required as of January 1, 2010. Technical

changes, including streamlined mortgage servic-

ing disclosure language, elimination of outdated

escrow account provisions, and a provision permit-

ting an “average charge” to be listed on the Good

Faith Estimate and HUD-1 Settlement Statement,

took effect on January 16, 2009. In addition, HUD

clarified that all disclosures required by RESPA are

permitted to be provided electronically, in accor-

dance with the Electronic Signatures in Global and

National Commerce Act (E-Sign).

The Dodd-Frank Wall Street Reform and Con-

sumer Protection Act (Dodd-Frank Act), Pub. L.

111-203 (July 10, 2010) granted rulemaking author-

ity under RESPA to the Consumer Financial Protec-

tion Bureau (CFPB) and, with respect to entities

under its jurisdiction, generally granted authority to

the CFPB to supervise for and enforce compliance

with RESPA and its implementing regulations.

December 2011, the CFPB restated HUD’s imple-

menting regulation at 12 CFR part 1024 (76 Fed.

Reg. 78978) (December 20, 2011).

On January 17, 2013, the CFPB issued a final

rule to amend Regulation X (78 Fed. Reg. 10695)

(February 14, 2013). The final rule implemented

certain provisions of Title XIV of the Dodd-Frank Act

and included substantive and technical changes to

the existing regulations. Substantive changes in-

cluded modifying the servicing transfer notice

requirements and implementing new procedures

and notice requirements related to borrowers’ error

resolution requests and information requests. The

amendments also included new provisions related

to escrow payments; force-placed insurance; gen-

eral servicing policies, procedures, and require-

ments; early intervention; continuity of contact; and

loss mitigation. The amendments are effective as of

January 10, 2014.

On July 10, 2013, September 13, 2013, and

October 22, 2014, the CFPB issued final rules to

further amend Regulation X (78 Fed. Reg. 44685

(July 24, 2013), 78 Fed. Reg. 60381 (October 1,

2013), and 79 Fed. Reg. 65299 (November 3,

2014)). The final rules included substantive and

technical changes to the existing regulations,

including revisions to provisions on the relation to

state law of Regulation X’s servicing provisions, to

the loss mitigation procedure requirements, and to

the requirements relating to notices of error and

information requests. On October 15, 2013, the

CFPB issued an interim final rule to further amend

Regulation X (78 Fed. Reg. 62993) (October 23,

2013) to exempt servicers from the early interven-

tion requirements in certain circumstances. The

Regulation X amendments are effective as of

January 10, 2014.

The amendments issued on January 17, 2013;

July 10, 2013; September 13, 2013; October 15,

2013; and October 22, 2014, are collectively

referred to in this document as the “2013-2014

Amendments.”

On December 31, 2013, the CFPB published

final rules implementing sections 1098(2) and

1. Pub. L. 104-208, Div. A., Title II § 2103 (c), September 30,

1996.

2. 15 U.S.C. 7001 et seq.

3. Dodd-Frank Act secs. 1002(12)(M), 1024(b)-(c), and 1025

(b)-(c); 1053; 12 U.S.C. 5481(12)(M), 5514(b)-(c), and 5515

(b)-(c).

Consumer Compliance Handbook Regulation X—RESPA • 1 (11/15)

1100A(5) of the Dodd-Frank Act, which direct the

CFPB to publish a single, integrated disclosure for

mortgage transactions, which includes mortgage

disclosure requirements under the and Truth in

Lending Act (TILA) and sections 4 and 5 of RESPA.

These amendments are referred to in this docu-

ment as the “TILA-RESPA Integrated Disclosure

Rule” or “TRID,” and are applicable to covered

closed-end mortgage loans for which a creditor or

mortgage broker receives an application on or after

October 3, 2015.

As a result, Regulation Z now

houses the integrated forms, timing, and related

disclosure requirements for most closed-end con-

sumer mortgage loans.

The new integrated disclosures are not used to

disclose information about reverse mortgages,

home equity lines of credit (HELOCs), chattel-

dwelling loans such as loans secured by a mobile

home or by a dwelling that is not attached to real

property (i.e., land), or other transactions not

covered by the TILA-RESPA Integrated Disclosure

rule. The final rule also does not apply to loans

made by a creditor who makes five or fewer

mortgages in a year. Creditors originating these

types of mortgages must continue to use, as

applicable, the Good Faith Estimate, HUD-1 Settle-

ment Statement, and Truth in Lending disclosures.

Subpart A—General Provisions

Coverage—12 CFR 1024.5(a)

RESPA is applicable to all “federally related

mortgage loans,” except as provided under 12

CFR 1024.5(b) and 1024.5(d), discussed below.

“Federally related mortgage loans” are defined as

loans (other than temporary loans), including

refinancings, that satisfy the following two criteria:

• First, the loan is secured by a first or subordinate

lien on residential real property, located within a

state, upon which either

— a one-to-four family structure is located or is to

be constructed using proceeds of the loan

(including individual units of condominiums

and cooperatives); or

— a manufactured home is located or is to be

constructed using proceeds of the loan.

• Second, the loan falls within one of the following

categories:

— loans made by a lender,

creditor,

dealer;

— loans made or insured by an agency of the

federal government;

— loans made in connection with a housing or

urban development program administered by

an agency of the federal government;

— loans made and intended to be sold by the

originating lender or creditor to Federal Na-

tional Mortgage Association (FNMA), Govern-

ment National Mortgage Association (GNMA),

or Federal Home Loan Mortgage Corporation

(FHLMC) (or its successor); or

— loans that are the subject of a home equity

conversion mortgage or reverse mortgage

issued by a lender or creditor subject to the

regulation.

“Federally related mortgage loans” are also

defined to include installment sales contracts, land

contracts, or contracts for deeds on otherwise

qualifying residential property if the contract is

funded in whole or in part by proceeds of a loan

made by a lender, specified federal agency, dealer

or creditor subject to the regulation.

Exemptions—12 CFR 1024.5(b)

The following transactions are exempt from cover-

age:

• a loan primarily for business, commercial or

agricultural purposes (definition identical to Regu-

lation Z, 12 CFR 1026.3(a)(1));

• a temporary loan, such as a construction loan.

(The exemption does not apply if the loan is used

as, or may be converted to, permanent financing

by the same financial institution or is used to

finance transfer of title to the first user of the

property.) If the lender issues a commitment for

permanent financing, it is covered by the regula-

tion.

• any construction loan with a term of two years or

more is covered by the regulation, unless it is

made to a bona fide contractor. “Bridge” or

“swing” loans are not covered by the regulation.

• a loan secured by vacant or unimproved property

where no proceeds of the loan will be used to

construct a one-to-four family residential struc-

ture. If the proceeds will be used to locate a

manufactured home or construct a structure

within two years from the date of settlement, the

loan is covered.

4. The effective date for the TILA RESPA Integrated Disclosure

rule was extended from August 1, 2015, to October 3, 2015, by a

final rule issued July 21, 2015, and published in the Federal

5. A lender includes financial institutions either regulated by, or

whose deposits or accounts are insured by, any agency of the

federal government.

6. A creditor is defined in sec. 103(g) of the Consumer Credit

Protection Act (15 U.S.C. 1602(g)). RESPA covers any creditor

that makes or invests in residential real estate loans aggregating

more than $1 million per year.

7. Dealer is defined in Regulation X to mean a seller,

contractor, or supplier of goods or services. Dealer loans are

covered by RESPA if the obligations are to be assigned before the

first payment is due to any lender or creditor otherwise subject to

the regulation.

Real Estate Settlement Procedures Act

2 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

• an assumption, unless the mortgage instruments

require lender approval for the assumption and

the lender approves the assumption.

• a conversion of a loan to different terms which are

consistent with provisions of the original mort-

gage instrument, as long as a new note is not

required, even if the lender charges an additional

fee for the conversion.

• a bona fide transfer of a loan obligation in the

secondary market. (However, the mortgage ser-

vicing requirements of subpart C, 12 CFR

1024.30-41, still apply.) Mortgage broker trans-

actions that are table funded (the loan is funded

by a contemporaneous advance of loan funds

and an assignment of the loan to the person

advancing the funds) are not secondary market

transactions and therefore are covered by RE-

SPA. Similarly, neither the creation of a dealer

loan or consumer credit contract, nor the first

assignment of such loan or contract to a lender,

is a secondary market transaction.

Partial Exemptions for Certain Mortgage

Loans—12 CFR 1024.5(d)

Most closed-end mortgage loans are exempt from

the requirement to provide the Good Faith Esti-

mate, HUD-1 settlement statement, and application

servicing disclosure requirements of 12 CFR 1024.6,

1024.7, 1024.8, 1024.10, and 1024.33(a). Instead,

these loans are subject to disclosure, timing, and

other requirements under TILA and Regulation Z.

Specifically, the aforementioned provisions do not

apply to a federally related mortgage loan that

• is subject to the special disclosure (TILA–RESPA

Integrated Disclosure) requirements for certain

consumer credit transactions secured by real

property set forth in Regulation Z, 12 CFR

1026.19(e), (f), and (g); or

• is subject to the partial exemption under 12 CFR

1026.3(h) (i.e., certain no-interest loans secured

by subordinate liens made for the purpose of

down payment or similar home buyer assistance,

property rehabilitation, energy efficiency, or fore-

closure avoidance or prevention. (12 CFR 1026.3

(h))

Note that a creditor may not use the TILA–RESPA

Integrated Disclosure forms instead of the GFE,

HUD-1, and Truth in Lending forms for transactions

that continue to be covered by TILA or RESPA that

require those disclosures (e.g., reverse mort-

gages).

Subpart B—Mortgage Settlement and

Escrow Accounts

Examiners should note that certain provisions in

subpart B (12 CFR 1024.6, 1024.7, 1024.8, and

1024.10) are applicable only to limited categories

of mortgage loans. See the discussion of 12 CFR

1024.5(d) above.

Special Information Booklet—12 CFR

1024.6

For mortgage loans that are not subject to the TILA

RESPA Integrated Disclosure rule (see 12 CFR

1026.19(e), (f) and (g)),

a loan originator

required to provide the borrower with a copy of the

Special Information Booklet at the time a written

application is submitted or no later than three

business days after the application is received. If

the application is denied before the end of the

three-business-day period, the loan originator is

8. 12 CFR 1024.5(b)(6).

9. Note: The Special Information Booklet may also be required

under 12 CFR 1026.19(g) for those closed-end mortgage loans

subject to the TILA–RESPA Integrated Disclosure Rule. A

discussion of those requirements is located in the Regulation Z

examination procedures.

10. A “loan originator” is defined as a lender or mortgage

broker. 12 CFR 1024.2(b).

Summary of Applicable Disclosure Requirements

Use TILA–RESPA Integrated Disclosures

(See Regulation Z)

• most closed-end mortgage loans, including

— construction-only loans

— loans secured by vacant land or by 25 or

more acres

Continue to use existing TIL, RESPA Disclosures

(as applicable)

• HELOCs (subject to disclosure requirements under

Regulation Z, 12 CFR 1026.40)

• reverse mortgages

(subject to existing TIL and

GFE disclosures)

• chattel-secured mortgages (i.e., mortgages secured by a

mobile home or by a dwelling that is not attached to real

property, such as land) (subject to existing TIL

disclosures, and not RESPA)

But note: In both cases, there is a partial exemption from these disclosures under 12 CFR 1026.3(h) for loans secured

by subordinate liens and associated with certain housing assistance loan programs for low- and moderate-income

persons.

Open-end reverse mortgages receive open-end disclosures, rather than GFEs or HUD-1s.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 3 (11/15)

not required to provide the booklet. If the borrower

uses a mortgage broker, the broker rather than the

lender, must provide the booklet.

The booklet does not need to be provided for

refinancing transactions, closed-end subordinate

lien mortgage loans and reverse mortgage trans-

actions, or for any other federally related mortgage

loan not intended for the purchase of a one-to-four

family residential property (12 CFR 1024.6(a)(3)).

A loan originator that complies with Regulation Z

(12 CFR 1026.40) for open-end home equity plans

(including providing the brochure entitled “What

You Should Know About Home Equity Lines of

Credit” or a suitable substitute) is deemed to have

complied with this section.

NOTE: The Special Information Booklet may also

be required under 12 CFR 1026.19(g) for those

closed-end mortgage loans subject to the TILA–

RESPA Integrated Disclosure Rule. A discussion of

those requirements is located in the Regulation Z

examination procedures.

Good Faith Estimate (GFE) of Settlement

Costs—12 CFR 1024.7 Standard GFE

Required

For closed-end reverse mortgages, a loan origina-

tor is required to provide a consumer with the

standard GFE form that is designed to allow

borrowers to shop for a mortgage loan by compar-

ing settlement costs and loan terms. (See GFE form

at appendix C to 12 CFR part 1024.)

Overview of the Standard GFE

The first page of the GFE includes a summary of

loan terms and a summary of estimated settlement

charges. It also includes information about key

dates such as when the interest rate for the loan

quoted in the GFE expires and when the estimate

for the settlement charges expires. The second

page discloses settlement charges as subtotals for

11 categories of costs. The third page provides a

table explaining which charges can change at

settlement, a trade-off table showing the relation-

ship between the interest rate and settlement

charges, and a shopping chart to compare the

costs and terms of loans offered by different

originators.

GFE Application Requirements

• The loan originator must provide the standard

GFE to the borrower within three business days of

receipt of an application for a mortgage loan. A

loan originator is not required to provide a GFE if

before the end of the three-business-day period,

the application is denied or the borrower with-

draws the application.

• An application can be in writing or electronically

submitted, including a written record of an oral

application.

• A loan originator determines what information it

needs to collect from a borrower and which of the

collected information it will use in order to issue a

GFE. Under the regulations, an “application”

includes at least the following six pieces of

information:

(1) the borrower’s name;

(2) the borrower’s gross monthly income;

(3) the borrower’s Social Security number (e.g.,

to enable the loan originator to obtain a credit

report);

(4) the property address;

(5) an estimate of the value of the property; and

(6) the mortgage loan amount sought. In addi-

tion, a loan originator may require the sub-

mission of any other information it deems

necessary.

• A loan originator will be presumed to have relied

on such information prior to issuing a GFE and

cannot base a revision of a GFE on that

information unless it changes or is later found to

be inaccurate.

• While the loan originator may require the bor-

rower to submit additional information beyond the

six pieces of information listed above in order to

issue a GFE, it cannot require, as a condition of

providing the GFE, the submission of supplemen-

tal documentation to verify the information pro-

vided by the borrower on the application. How-

ever, a loan originator is not prohibited from using

its own sources to verify the information provided

by the borrower prior to issuing the GFE. The loan

originator can require borrowers to provide

verification information after the GFE has been

issued in order to complete final underwriting.

• For dealer loans, the loan originator is respon-

sible for providing the GFE directly or ensuring

that the dealer provides the GFE.

• For mortgage brokered loans, either the lender or

the mortgage broker must provide a GFE within

three business days after a mortgage broker

receives either an application or information

sufficient to complete an application. The lender

is responsible for ascertaining whether the GFE

Real Estate Settlement Procedures Act

4 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

has been provided. If the mortgage broker has

provided the GFE to the applicant, the lender is

not required to provide an additional GFE.

• A loan originator is prohibited from charging a

borrower any fee in order to obtain a GFE unless

the fee is limited to the cost of a credit report.

GFE Not Required for Open-End Lines of

Credit—12 CFR 1024.7(h)

A loan originator that complies with Regulation Z

(12 CFR 1026.40) for open-end home equity plans

is deemed to have complied with 12 CFR 1024.7.

Availability of GFE Terms—12 CFR 1024.7(c)

Regulation X does not establish a minimum period

of availability for which the interest rate must be

honored. The loan originator must determine the

expiration date for the interest rate of the loan

stated on the GFE. In contrast, Regulation X

requires that the estimated settlement charges and

loan terms listed on the GFE be honored by the

loan originator for at least 10 business days from

the date the GFE is provided. The period of

availability for the estimated settlement charges

and loan terms as well as the period of availability

for the interest rate of the loan stated on the GFE

must be listed on the GFE in the “important dates”

section of the form.

After the expiration date for the interest rate of the

loan stated on the GFE, the interest rate and the

other rate related charges, including the charge or

credit for the interest rate chosen, the adjusted

origination charges and the per diem interest can

change until the interest rate is locked.

Key GFE Form Contents—12 CFR

1024.7(d)

The loan originator must ensure that the required

GFE form is completed in accordance with the

instructions set forth in appendix C of 12 CFR part

1024.

First Page of GFE

• The first page of the GFE discloses identifying

information such as the name and address of the

“loan originator,” which includes the lender or the

mortgage broker originating the loan. The “pur-

pose” section indicates what the GFE is about

and directs the borrower to the Truth in Lending

disclosures and HUD’s website for more informa-

tion. The borrower is informed that only the

borrower can shop for the best loan and that the

borrower should compare loan offers using the

shopping chart on the third page of the GFE.

• The “important dates” section requires the loan

originator to state the expiration date for the

interest rate for the loan provided in the GFE as

well as the expiration date for the estimate of

other settlement charges and the loan terms not

dependent upon the interest rate.

• While the interest rate stated on the GFE is not

required to be honored for any specific period of

time, the estimate for the other settlement charges

and other loan terms must be honored for at least

10 business days from when the GFE is provided.

• In addition, the form must state how many

calendar days within which the borrower must go

to settlement once the interest rate is locked (rate

lock period). The form also requires disclosure of

how many days prior to settlement the interest

rate would have to be locked, if applicable.

• The “summary of your loan” section requires

disclosure of the initial loan amount; loan term;

initial interest rate; initial monthly payment for

principal, interest, and any mortgage insurance;

whether the interest rate can rise, and if so, the

maximum rate to which it can rise over the life of

the loan, and the period of time after which the

interest rate can first change; whether the loan

balance can rise if the payments are made on

time and if so, the maximum amount to which it

can rise over the life of the loan; whether the

monthly amount owed for principal, interest, and

any mortgage insurance can rise even if pay-

ments are made on time, and if so, the maximum

amount to which the monthly amount owed can

ever rise over the life of the loan; whether the loan

has a prepayment penalty, and if so, the

maximum amount it could be; and whether the

loan has a balloon payment, and if so, the amount

of such payment and in how many years it will be

due. Specific instructions are provided with

respect to closed-end reverse mortgages.

• The “escrow account information” section re-

quires the loan originator to indicate whether the

loan does or does not have an escrow account to

pay property taxes or other property-related

charges. In addition, this section also requires

the disclosure of the monthly amount owed for

principal, interest, and any mortgage insurance.

Specific instructions are provided with respect to

closed-end reverse mortgages.

• The bottom of the first page includes subtotals for

the adjusted origination charges and charges for

all other settlement charges listed on page two,

along with the total estimated settlement charges.

Second Page of GFE

The second page of the GFE requires disclosure of

all settlement charges. It provides for the estimate

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 5 (11/15)

of total settlement costs in 11 categories discussed

below. The adjusted origination charges are dis-

closed in “Block A” and all other settlement

charges are disclosed in “Block B.” The amounts in

the blocks are to be added to arrive at the “total

estimated settlement charges,” which is required to

be listed at the bottom of the page.

Disclosure of Adjusted Origination Charge

(Block A)

Block A addresses disclosure of origination

charges, which include all lender and mortgage

broker charges. The “adjusted origination charge”

results from the subtraction of a “credit” from the

“origination charge” or the addition of a “charge” to

the origination charge.

• Block 1—the origination charges, which include

lender processing and underwriting fees and any

fees paid to a mortgage broker.

Origination charge note: This block requires the

disclosure of all charges that all loan originators

involved in the transaction will receive for originat-

ing the loan (excluding any charges for points). A

loan originator may not separately charge any

additional fees for getting the loan such as

application, processing or underwriting fees. The

amount in Block 1 is subject to zero tolerance, i.e.,

the amount cannot change at settlement.

• Block 2—a “credit” or “charge” for the interest

rate chosen.

Credit or charge for the interest rate chosen note:

Transaction involving a mortgage broker. For a

transaction involving a mortgage broker,

Block 2

requires disclosure of a “credit” or charge (points)

for the specific interest rate chosen. The credit or

charge for the specific interest rate chosen is the

net payment to the mortgage broker (i.e., the sum

of all payments to the mortgage broker from the

lender, including payments based on the loan

amount, a flat rate or any other compensation, and

in a table funded transaction, the loan amount less

the price paid for the loan by the lender.)

When the net payment to the mortgage broker

from the lender is positive, there is a “credit” to the

borrower and it is entered as a negative amount.

For example, if the lender pays a yield spread

premium to a mortgage broker for the loan set forth

in the GFE, the payment must be disclosed as a

“credit” to the borrower for the particular interest

rate listed on the GFE (reflected on the GFE at

Block 2, checkbox 2). The term “yield spread

premium” is not featured on the GFE or the HUD-1

Settlement Statement.

Points paid by the borrower for the interest rate

chosen must be disclosed as a “charge” (reflected

on the GFE at Block 2, third checkbox). A loan

cannot include both a charge (points) and a credit

(yield spread premium).

Transaction not involving a mortgage broker. For

a transaction without a mortgage broker, a lender

may choose not to separately disclose any credit or

charge for the interest rate chosen for the loan in

the GFE. If the lender does not include any credit or

charge in Block 2, it must check the first checkbox

in Block 2 indicating that “The credit or charge for

the interest rate you have chosen is included in ’our

origination charge’ above.” Only one of the boxes

in Block 2 may be checked, as a credit and charge

cannot occur together in the same transaction.

Disclosure of Charges for All Other

Settlement Services (Block B)

Block B is the sum of charges for all settlement

services other than the origination charges.

• Block 3—required services by providers se-

lected by the lender such as appraisal and flood

certification fee

• Block 4—title service fees and the cost of

lender’s title insurance

• Block 5—owner’s title insurance

• Block 6—other required services for which the

consumer may shop

• Block 7—government recording charges

• Block 8—transfer tax charges

• Block 9—initial deposit for escrow account

• Block 10—daily interest charges

• Block 11—homeowner’s insurance charges

Third Page of GFE

The third page of the GFE includes the following

information:

• a tolerance chart identifying the charges that can

change at settlement (see discussion on toler-

ances below);

• a trade-off table that requires the loan originator

to provide information on the loan described in

the GFE and at the loan originator’s option,

information about alternative loans (one with

lower settlement charges but a higher interest

11. The 2008 RESPA Reform Rule changed the definition of

“mortgage broker” to mean a person or entity (not an employee of

a lender) that renders origination services and serves as an

intermediary between a lender and a borrower in a transaction

involving a federally related mortgage loan, including such person

or entity that closes the loan in its own name and table funds the

transaction. The definition will also apply to a loan correspondent

approved under 24 CFR 202.8 for Federal Housing Administration

(FHA) programs. The definition would also include an “exclusive

agent” who is not an employee of the lender.

Real Estate Settlement Procedures Act

6 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

rate and one with a lower interest rate but higher

settlement charges);

• a shopping chart that allows the consumer to fill

in loan terms and settlement charges from other

lenders or brokers to use to compare loans; and

• language indicating that some lenders may sell

the loan after settlement but that any fees the

lender receives in the future cannot change the

borrower’s loan or the settlement charges.

Tolerances on Settlement Costs—

12 CFR 1024.7(e) and (i)

The 2008 RESPA Reform Rule established “toler-

ances” or limits on the amount actual settlement

charges can vary at closing from the amounts

stated on the GFE. The rule established three

categories of settlement charges and each cat-

egory has different tolerances. If, at settlement, the

charges exceed the charges listed on the GFE by

more than the permitted tolerances, the loan

originator may cure the tolerance violation by

reimbursing to the borrower the amount by which

the tolerance was exceeded, at settlement or within

30 calendar days after settlement.

Tolerance Categories

• Zero tolerance category. This category of fees is

subject to a zero tolerance standard. The fees

estimated on the GFE may not be exceeded at

closing. These fees include

— the loan originator’s own origination charge,

including processing and underwriting fees;

— the credit or charge for the interest rate

chosen (i.e., yield spread premium or dis-

count points) while the interest rate is locked;

— the adjusted origination charge while the

interest rate is locked; and

— state/local property transfer taxes.

• Ten percent tolerance category. For this category

of fees, while each individual fee may increase or

decrease, the sum of the charges at settlement

may not be greater than 10 percent above the

sum of the amounts included on the GFE. This

category includes fees for

— loan originator required settlement services,

where the loan originator selects the third-

party settlement service provider;

— loan originator required services, title ser-

vices, required title insurance and owner’s

title insurance when the borrower selects a

third-party provider identified by the loan

originator; and

— government recording charges.

• No tolerance category. The final category of fees

is not subject to any tolerance restriction. The

amounts charged for the following settlement

services included on the GFE can change at

settlement and the amount of the change is not

limited:

— loan originator required services where the

borrower selects his or her own third-party

provider;

— title services, lender’s title insurance, and

owner’s title insurance when the borrower

selects his or her own provider;

— initial escrow deposit;

— daily interest charges; and

— homeowner’s insurance.

Identification of Third-Party Settlement

Service Providers

When the loan originator permits a borrower to

shop for one or more required third-party settle-

ment services and select the settlement service

provider for such required services, the loan

originator must list in the relevant block on page

two of the GFE the settlement service and the

estimated charge to be paid to the provider of each

required service. In addition, the loan originator

must provide the borrower with a written list of

settlement service providers for those required

services on a separate sheet of paper at the time

the GFE is provided.

Binding GFE—12 CFR 1024.7(f)

The loan originator is bound, within the tolerances

provided, to the settlement charges and terms

listed on the GFE provided to the borrower, unless

a new GFE is provided prior to settlement (see

discussion below on changed circumstances). This

also means that if a lender accepts a GFE issued

by a mortgage broker, the lender is subject to the

loan terms and settlement charges listed in the

GFE, unless a new GFE is issued prior to settle-

ment.

Changed Circumstances—12 CFR

1024.2(b), 1024.7(f)(1) and (f)(2)

Changed circumstances are defined as

• acts of God, war, disaster, or other emergency;

• information particular to the borrower or transac-

tion that was relied on in providing the GFE that

changes or is found to be inaccurate after the

GFE has been provided;

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 7 (11/15)

• new information particular to the borrower or

transaction that was not relied on in providing the

GFE; or

• other circumstances that are particular to the

borrower or transaction, including boundary

disputes, the need for flood insurance, or envi-

ronmental problems.

Changed circumstances do not include the borrow-

er’s name, the borrower’s monthly income, the

property address, an estimate of the value of the

property, the mortgage loan amount sought, and

any information contained in any credit report

obtained by the loan originator prior to providing

the GFE, unless the information changes or is found

to be inaccurate after the GFE has been provided.

In addition, market price fluctuations by themselves

do not constitute changed circumstances.

Changed circumstances affecting settlement

costs are those circumstances that result in

increased costs for settlement services such that

the charges at settlement would exceed the

tolerances or limits on those charges established

by the regulations.

Changed circumstances affecting the loan are

those circumstances that affect the borrower’s

eligibility for the loan. For example, if underwriting

and verification indicate that the borrower is

ineligible for the loan provided in the GFE, the loan

originator would no longer be bound by the original

GFE. In such cases, if a new GFE is to be provided,

the loan originator must do so within three business

days of receiving information sufficient to establish

changed circumstances. The loan originator must

document the reason that a new GFE was provided

and must retain documentation of any reasons for

providing a new GFE for no less than three years

after settlement.

None of the information collected by the loan

originator prior to issuing the GFE may later

become the basis for a “changed circumstance”

upon which it may offer a revised GFE, unless: (1)

it can demonstrate that there was a change in the

particular information, or (2) that the information

was inaccurate, or (3) that it did not rely on that

particular information in issuing the GFE. A loan

originator has the burden of demonstrating nonre-

liance on the collected information but may do so

through various means, including through a docu-

mented record in the underwriting file or an

established policy of relying on a more limited set

of information in providing GFEs.

If a loan originator issues a revised GFE based

on information previously collected in issuing the

original GFE and “changed circumstances,” it must

document the reasons for issuing the revised GFE,

such as its nonreliance on such information or the

inaccuracy of such information.

Borrower Requested Changes—

12 CFR 1024.7(f)(3)

If a borrower requests changes to the mortgage

loan identified in the GFE that change the settle-

ment charges or the terms of the loan, the loan

originator may provide a revised GFE to the

borrower. If a revised GFE is provided, the loan

originator must do so within three business days of

the borrower’s request.

Expiration of Original GFE—

12 CFR 1024.7(f)(4)

If a borrower does not express an intent to continue

with an application within 10 business days after

the GFE is provided, or such longer time provided

by the loan originator, the loan originator is no

longer bound by the GFE.

Interest Rate Dependent Charges and

Terms—12 CFR 1024.7(f)(5)

If the interest rate has not been locked by the

borrower, or a locked interest rate has expired, all

interest rate-dependent charges on the GFE are

subject to change. The charges that may change

include the charge or credit for the interest rate

chosen, the adjusted origination charges, per diem

interest, and loan terms related to the interest rate.

However, the loan originator’s origination charge

(listed in Block 1 of page 2 of the GFE) is not

subject to change, even if the interest rate floats,

unless there is another changed circumstance or

borrower-requested change.

If the borrower later locks the interest rate, a new

GFE must be provided showing the revised interest

rate dependent charges and terms. All other

charges and terms must remain the same as on the

original GFE, unless changed circumstances or

borrower-requested changes result in increased

costs for settlement services or affect the borrow-

er’s eligibility for the specific loan terms identified in

the original GFE.

New Home Purchases—

12 CFR 1024.7(f)(6)

In transactions involving new home purchases,

where settlement is expected to occur more than

60 calendar days from the time a GFE is provided,

the loan originator may provide the GFE to the

borrower with a clear and conspicuous disclosure

stating that at any time up until 60 calendar days

prior to closing, the loan originator may issue a

revised GFE. If the loan originator does not provide

such a disclosure, it cannot issue a revised GFE

except as otherwise provided in Regulation X.

Real Estate Settlement Procedures Act

8 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

Volume-Based Discounts

The 2008 RESPA Reform Rule did not formally

address the legality of volume-based discounts.

However, HUD indicated in the preamble to the rule

that discounts negotiated between loan originators

and other settlement service providers, where the

discount is ultimately passed on to the borrower in

full, is not, depending on the circumstances of a

particular transaction, a violation of Section 8 of

RESPA.

Uniform Settlement Statement

(HUD-1 OR HUD-1A)—12 CFR

1024.8

For closed-end reverse mortgages, the person

conducting the settlement (settlement agent) must

provide the borrower with a HUD-1 Settlement

Statement at or before settlement that clearly

itemizes all charges imposed on the buyer and the

seller in connection with the settlement. The 2008

RESPA Reform rule included a revised HUD-1/1A

Settlement Statement form that is required as of

January 1, 2010. The HUD-1 is used for transac-

tions in which there is a borrower and seller. For

transactions in which there is a borrower and no

seller (refinancings and subordinate lien loans), the

HUD-1 may be completed by using the borrower’s

side of the settlement statement. Alternatively, the

HUD-1A may be used.

However, no settlement statement is required for

home equity plans subject to TILA and Regulation

Z, appendix A to 12 CFR 1024 contains the

instructions for completing the forms.

Key 2008 RESPA Reform Enhancements

to the HUD-1/1A Settlement Statement

While the 2008 RESPA Reform Rule did not include

any substantive changes to the first page of the

HUD-1/1A form, there were changes to the second

page of the form to facilitate comparison between

the HUD-1/1A and the GFE. Each designated line

on the second page of the revised HUD-1/1A

includes a reference to the relevant line from the

GFE.

With respect to disclosure of “no cost” loans

where “no cost” refers only to the loan originator’s

fees (see section L, subsection 800 of the HUD-1

form), the amounts shown for the “origination

charge” and the “credit or charge for the interest

rate chosen” should offset, so that the “adjusted

origination charge” is zero.

In the case of a “no cost” loan where “no cost”

encompasses loan originator and third-party fees,

all third-party fees must be itemized and listed in

the borrower’s column on the HUD-1/1A. These

itemized charges must be offset with a negative

adjusted origination charge (line 803) and re-

corded in the columns.

To further facilitate comparability between the

forms, the revised HUD-1 includes a third page

(second page of the HUD-1A) that allows borrow-

ers to compare the loan terms and settlement

charges listed on the GFE with the terms and

charges listed on the closing statement. The first

half of the third page includes a comparison chart

that sets forth the settlement charges from the GFE

and the settlement charges from the HUD-1 to

allow the borrower to easily determine whether the

settlement charges exceed the charges stated on

the GFE. If any charges at settlement exceed the

charges listed on the GFE by more than the

permitted tolerances, the loan originator may cure

the tolerance violation by reimbursing to the

borrower the amount by which the tolerance was

exceeded. A borrower will be deemed to have

received timely reimbursement if the financial

institution delivers or places the payment in the mail

within 30 calendar days after settlement.

Inadvertent or technical errors on the settlement

statement are not deemed to be a violation of

Section 4 of RESPA if a revised HUD-1/1A is

provided to the borrower within 30 calendar days

after settlement.

The second half of the third page sets forth the

loan terms for the loan received at settlement in a

format that reflects the summary of loan terms on

the first page of the GFE, but with additional loan

related information that would be available at

closing. The note at the bottom of the page

indicates that the borrower should contact the

lender if the borrower has questions about the

settlement charges or loan terms listed on the form.

Section 1024.8(b) and the instructions for com-

pleting the HUD-1/1A Settlement Statement pro-

vide that the loan originator shall transmit sufficient

information to the settlement agent to allow the

settlement agent to complete the “loan terms”

section. The loan originator must provide the

information in a format that permits the settlement

agent to enter the information in the appropriate

spaces on the HUD-1/1A, without having to refer to

the loan documents.

Average Charge Permitted

As of January 16, 2009, an average charge may be

stated on the HUD-1/1A if such average charge is

computed in accordance with 12 CFR 1024.8(b)

(2). All settlement service providers, including loan

originators, are permitted to list the average charge

for a settlement service on the HUD-1/1A Settle-

12. 73 Fed. Reg. 68204, 68232 (November 17, 2008).

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 9 (11/15)

ment Statement (and on the GFE) rather than the

exact cost for that service.

The method of determining the average charge

is left up to the settlement service provider. The

average charge may be used as the charge for any

third-party vendor charge, not for the provider’s

own internal charges. The average charge also

cannot be used where the charge is based on the

loan amount or the value of the property.

The average charge may be used for any

third-party settlement service, provided that the

total amounts received from borrowers for that

service for a particular class of transactions do not

exceed the total amounts paid to providers of that

service for that class of transactions. A class of

transactions may be defined based on the period

of time, type of loan, and geographic area. If an

average charge is used in any class of transactions

defined by the loan originator, then the loan

originator must use the same average charge for

every transaction within that class. The average

charge must be recalculated at least every six

months.

A settlement service provider that uses an

average charge for a particular service must

maintain all documents that were used to calculate

the average charge for at least three years after any

settlement in which the average charge was used.

Printing and Duplication of the

Settlement Statement—12 CFR 1024.9

Financial institutions have numerous options for

layout and format in reproducing the HUD-1 and

HUD-1A that do not require prior CFPB approval

such as size of pages; tint or color of pages; size

and style of type or print; spacing; printing on

separate pages, front and back of a single page, or

on one continuous page; use of multicopy tear-out

sets; printing on rolls for computer purposes;

addition of signature lines; and translation into any

language. Other changes may be made only with

the approval of the CFPB.

One-Day Advance Inspection of the

Settlement Statement—12 CFR 1024.10

For closed-end reverse mortgages, and upon

request by the borrower, the HUD-1 or HUD-1A

must be completed and made available for inspec-

tion during the business day immediately preced-

ing the day of settlement, setting forth those items

known at that time by the person conducting the

closing.

Delivery—12 CFR 1024.10(a) and (b)

The completed HUD-1 or HUD-1A must be mailed

or delivered to the borrower, the seller (if there is

one), the lender (if the lender is not the settlement

agent), and/or their agents at or before settlement.

However, the borrower may waive the right of

delivery by executing a written waiver at or before

settlement. The HUD-1 or HUD-1A shall be mailed

or delivered as soon as practicable after settlement

if the borrower or borrower’s agent does not attend

the settlement.

Retention—12 CFR 1024.10(e)

A lender must retain each completed HUD-1 or

HUD-1A and related documents for five years after

settlement, unless the lender disposes of its

interest in the mortgage and does not service the

mortgage. If the loan is transferred, the lender shall

provide a copy of the HUD-1 or HUD-1A to the

owner or servicer of the mortgage as part of the

transfer. The owner or servicer shall retain the

HUD-1 or HUD-1A for the remainder of the five-year

period.

Prohibition of Fees for Preparing Federal

Disclosures—12 CFR 1024.12

For loans subject to RESPA, no fee may be

charged for preparing the Settlement Statement or

the Escrow Account statement or any disclosures

required by the Truth in Lending Act.

Prohibition against Kickbacks and

Unearned Fees—12 CFR 1024.14

Any person who gives or accepts a fee, kickback,

or thing of value (payments, commissions, gifts,

tangible item, or special privileges) for the referral

of settlement business is in violation of Section 8(a)

of RESPA. Any person who gives or accepts any

portion, split, or percentage of a charge for real

estate settlement services, other than for services

actually performed, is in violation of Section 8(b) of

RESPA. Appendix B of Regulation X provides

guidance on the meaning and coverage of the

prohibition against kickbacks and unearned fees.

RESPA Section 8(b) is not violated when a single

party charges and retains a settlement service fee,

and that fee is unearned or excessive.

Penalties and Liabilities

Civil and criminal liability is provided for violating

the prohibition against kickbacks and unearned

fees including

• civil liability to the parties affected, equal to three

times the amount of any charge paid for such

settlement service

Real Estate Settlement Procedures Act

10 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

• the possibility that the costs associated with any

court proceeding together with reasonable attor-

ney’s fees could be recovered

• a fine of not more than $10,000 or imprisonment

for not more than one year or both

Affiliated Business Arrangements—

12 CFR 1024.15

If a loan originator (or an associate)

has either an

affiliate relationship or a direct or beneficial owner-

ship interest of more than 1 percent in a provider of

settlement services and the loan originator directly

or indirectly refers business to the provider it is an

affiliated business arrangement. An affiliated busi-

ness arrangement is not a violation of Section 8 of

RESPA and of 12 CFR 1024.14 of Regulation X if

the following conditions are satisfied.

Prior to the referral, the person making each

referral has provided to each person whose

business is referred an Affiliated Business Arrange-

ment Disclosure Statement (appendix D of Regu-

lation X). This disclosure shall specify the following:

• the nature of the relationship (explaining the

ownership and financial interest) between the

provider and the loan originator, and

• the estimated charge or range of charges

generally made by such provider.

This disclosure must be provided on a separate

piece of paper either at the time of loan application,

or with the GFE, or at the time of the referral.

The loan originator may not require the use of

such a provider, with the following exceptions: the

institution may require a buyer, borrower, or seller

to pay for the services of an attorney, credit

reporting agency, or real estate appraiser chosen

by the institution to represent its interest. The loan

originator may only receive a return on ownership

or franchise interest or payment otherwise permit-

ted by RESPA.

Title Companies—12 CFR 1024.16

Sellers that hold legal title to the property being

sold are prohibited from requiring borrowers, either

directly or indirectly, as a condition to selling the

property, to use a particular title company.

Escrow Accounts—12 CFR 1024.17

On October 26, 1994, HUD issued its final rule

changing the accounting method for escrow ac-

counts, which was originally effective April 24,

1995. The rule establishes a national standard

accounting method, known as aggregate account-

ing. The final rule also established formats and

procedures for initial and annual escrow account

statements.

The amount of escrow funds that can be

collected at settlement or upon creation of an

escrow account is restricted to an amount sufficient

to pay charges, such as taxes and insurance, that

are attributable to the period from the date such

payments were last paid until the initial payment

date. Throughout the life of an escrow account, the

servicer may charge the borrower a monthly sum

equal to 1/12 of the total annual escrow payments

that the servicer reasonably anticipates paying

from the account. In addition, the servicer may add

an amount to maintain a cushion no greater than

1/6 of the estimated total annual payments from the

account.

Escrow Account Analysis—12 CFR

1024.17(c)(2) and (3) and 12 CFR

1024.17(k)

Before establishing an escrow account, a servicer

must conduct an analysis to determine the periodic

payments and the amount to be deposited. The

servicer shall use an escrow disbursement date

that is on or before the deadline to avoid a penalty

and may make annual lump sum payments to take

advantage of a discount.

Transfer of Servicing—12 CFR

1024.17(e)

If the new servicer changes either the monthly

payment amount or the accounting method used

by the old servicer, then it must provide the

borrower with an initial escrow account statement

within 60 days of the date of transfer. When the new

servicer provides an initial escrow account state-

ment, it shall use the effective date of the transfer of

servicing to establish the new escrow account

computation year. In addition, if the new servicer

retains the monthly payments and accounting

method used by the old servicer, then the new

servicer may continue to use the same computation

year established by the old servicer or it may

choose a different one, using a short year state-

ment.

13. An associate includes a corporation or business entity that

controls, is controlled by, or is under common control with the

institution; an employer, officer, director, partner, franchisor, or

franchisee of the institution; or anyone with an arrangement with

the institution that enables the person to refer settlement business

and benefit financially from the referrals (12 U.S.C. 2602(8)).

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 11 (11/15)

Shortages, Surpluses, and Deficiency

Requirements—12 CFR 1024.17(f)

The servicer shall conduct an annual escrow

account analysis to determine whether a surplus,

shortage, or deficiency exists as defined under 12

CFR 1024.17(b).

If the escrow account analysis discloses a

surplus, the servicer shall, within 30 days from the

date of the analysis, refund the surplus to the

borrower if the surplus is greater than or equal to

$50. If the surplus is less than $50, the servicer may

refund such amount to the borrower or credit such

amount against the next year’s escrow payments.

These provisions apply as long as the borrower’s

mortgage payment is current at the time of the

escrow account analysis.

If the escrow account analysis discloses a

shortage of less than one month’s escrow pay-

ments, then the servicer has three possible courses

of action:

• the servicer may allow the shortage to exist and

do nothing to change it;

• the servicer may require the borrower to repay

the shortage amount within 30 days; or

• the servicer may require the borrower to repay

the shortage amount in equal monthly payments

over at least a 12-month period.

If the shortage is more than or equal to one month’s

escrow payment, then the servicer has two pos-

sible courses of action:

• the servicer may allow the shortage to exist and

do nothing to change it; or

• the servicer may require the borrower to repay

the shortage in equal monthly payments over at

least a 12-month period.

If the escrow account analysis discloses a defi-

ciency, then the servicer may require the borrower

to pay additional monthly deposits to the account to

eliminate the deficiency.

If the deficiency is less than one month’s escrow

account payment, then the servicer;

• may allow the deficiency to exist and do nothing

to change it;

• may require the borrower to repay the deficiency

within 30 days; or

• may require the borrower to repay the deficiency

in two or more equal monthly payments.

If the deficiency is greater than or equal to one

month’s escrow payment, the servicer may allow

the deficiency to exist and do nothing to change it,

or require the borrower to repay the deficiency in

two or more equal monthly payments.

These provisions apply as long as the borrower’s

mortgage payment is current at the time of the

escrow account analysis.

A servicer must notify the borrower at least once

during the escrow account computation year if a

shortage or deficiency exists in the account.

Initial Escrow Account Statement—12

CFR 1024.17(g)

After analyzing each escrow account, the servicer

must submit an initial escrow account statement to

the borrower at settlement or within 45 calendar

days of settlement for escrow accounts that are

established as a condition of the loan.

The initial escrow account statement must in-

clude the monthly mortgage payment; the portion

going to escrow; itemize estimated taxes, insur-

ance premiums, and other charges; the anticipated

disbursement dates of those charges; the amount

of the cushion; and a trial running balance.

Annual Escrow Account Statement—12

CFR 1024.17(i)

A servicer shall submit to the borrower an annual

statement for each escrow account within 30 days

of the completion of the computation year. The

servicer must conduct an escrow account analysis

before submitting an annual escrow account state-

ment to the borrower.

The annual escrow account statements must

contain the account history; projections for the next

year; current mortgage payment and portion going

to escrow; amount of past year’s monthly mortgage

payment and portion that went into the escrow

account; total amount paid into the escrow account

during the past year; amount paid from the account

for taxes, insurance premiums, and other charges;

balance at the end of the period; explanation of

how the surplus, shortage, or deficiency is being

handled; and, if applicable, the reasons why the

estimated low monthly balance was not reached.

Short-Year Statements—12 CFR

1024.17(i)(4)

Short-year statements can be issued to end the

escrow account computation year and establish

the beginning date of the new computation year.

Short-year statements may be provided upon the

transfer of servicing and are required upon loan

payoff. The statement is due to the borrower within

60 days after receiving the pay-off funds.

Timely Payments—12 CFR 1024.17(k)

The servicer must pay escrow disbursements by

Real Estate Settlement Procedures Act

12 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

the disbursement date. In calculating the disburse-

ment date, the servicer must use a date on or

before the deadline to avoid a penalty and may

make annual lump sum payments to take advan-

tage of a discount. The 2013–14 Amendments

include a requirement that a servicer may not

purchase force-placed insurance unless it is un-

able to disburse funds from the borrower’s escrow

account to maintain the borrower’s hazard insur-

ance. A servicer is unable to disburse funds only if

the servicer has a reasonable basis to believe that

either the borrower’s property is vacant or the

borrower’s hazard insurance has terminated for

reasons other than nonpayment. A servicer is not

unable to disburse funds from the borrower’s

escrow account solely because the account is

deficient. If a servicer advances funds to an escrow

account to ensure that the borrower’s hazard

insurance premium charges are paid in a timely

manner, a servicer may seek repayment from the

borrower for the funds the servicer advanced,

unless otherwise prohibited by applicable law.

The 2013–14 Amendments include a limited

exemption from the restriction on force-placed

insurance purchases for small servicers. Subject to

the requirements of 12 CFR 1024.37, small ser-

vicers may purchase force-placed insurance and

charge the borrower for the cost of that insurance if

the cost to the borrower is less than the amount the

small servicer would need to disburse from the

borrower’s escrow account to ensure timely pay-

ment of the borrower’s hazard insurance premium

charges.

An institution qualifies as a small servicer if either

• the institution services, together with any affili-

ates, 5,000 or fewer mortgage loans, as that term

is used in 12 CFR 1026.41(a)(1), for all of which

the institution (or an affiliate) is the creditor or

assignee;

• the institution is a Housing Finance Agency, as

defined in 24 CFR 266.5 (12 CFR 1026.41(e)(4)

(ii)); or

• the institution is a nonprofit entity (defined in 12

CFR 1026.41(e)(4)(ii)(C)(1)) that services 5,000

or fewer mortgage loans, including any mortgage

loans serviced on behalf of associated nonprofit

entities (defined in 12 CFR 1026.41(e)(4)(ii)(C)

(2)), for all of which the servicer or an associated

nonprofit entity is the creditor.

The determination as to whether a servicer qualifies

as a small servicer is generally made based on the

mortgage loans, as that term is used in 12 CFR

1026.41(a)(1), serviced by the servicer and any

affiliates as of January 1 for the remainder of that

calendar year. However, to determine small ser-

vicer status under the nonprofit small servicer

definition, a nonprofit servicer should be evaluated

based on the mortgage loans serviced by the

servicer (and not those serviced by associated

nonprofit entities) as of January 1 for the remainder

of the calendar year. A servicer that ceases to

qualify as a small servicer will have six months from

the time it ceases to qualify or until the next January

1, whichever is later, to comply with any require-

ments for which a servicer is no longer exempt. The

following mortgage loans are not considered in

determining whether a servicer qualifies as a small

servicer: (a) mortgage loans voluntarily serviced by

the servicer for a creditor or assignee that is not an

affiliate of the servicer and for which the servicer

does not receive any compensation, (b) reverse

mortgage transactions, and (c) mortgage loans

secured by consumers’ interests in timeshare plans

(12 CFR 1026.41(e)(4)(iii)).

List of Homeownership Counseling

Organizations—12 CFR 1024.20

For any application for a federally related mortgage

loan, as that term is defined in 12 CFR 1024.2

subject to the exemptions in 12 CFR 1024.5(b)

(except for applications for reverse mortgages or

timeshare loans), the lender must provide a loan

applicant with a clear and conspicuous written list

of homeownership counseling services in the loan

applicant’s location, no later than three business

days after a lender, mortgage broker, or dealer

receives an application or information sufficient to

complete an application. The list is available on a

website maintained by the CFPB or from data made

available by the CFPB or HUD. Lenders must make

sure that the list of homeownership counseling

services was obtained no earlier than 30 days

before they provide it to the applicant. This list may

be combined with other disclosures (unless other-

wise prohibited by Regulation X or Regulation Z). A

mortgage broker or dealer that receives a loan

application, or for whom it prepares an application,

may provide the list, in which case the lender is not

required to provide an additional list, though in all

cases the lender remains responsible for ensuring

that the list is provided to the applicant. The list may

be provided in person, by mail, or other means. The

list may be provided in electronic form, subject to

compliance with the consumer consent and other

applicable provisions of E-Sign.

If, before the three-day period ends, the lender

denies the application or the applicant withdraws it,

the lender does not have to provide the list. If the

transaction involves more than one lender, the

lenders should agree on which of them will provide

the list. If there is more than one applicant, the list

can go to any one of them that has primary liability

on the loan.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 13 (11/15)

Subpart C—Mortgage Servicing

Scope—12 CFR 1024.30

Except as otherwise noted below, the provisions of

Subpart C—Mortgage Servicing, 12 CFR 1024.30-

41, apply to any mortgage loan, as that term is

defined in 12 CFR 1024.31.

Definitions—12 CFR 1024.31

The 2013–14 Amendments added several defini-

tions that are applicable to Subpart C—Mortgage

Servicing, 12 CFR 1024.30-41. Among other defi-

nitions, amended Regulation X provides that “mort-

gage loan” means “any federally related mortgage

loan, as that term is defined in 12 CFR 1024.2

subject to the exemptions in 12 CFR 1024.5(b), but

does not include open-end lines of credit (home

equity plans).” Thus, the term “mortgage loan”

includes (but is not limited to) refinancing transac-

tions, whether secured by a senior or subordinate

lien.

General Disclosure Requirements—

12 CFR 1024.32

Disclosure Requirements—12 CFR

1024.32(a)

Disclosures required under 12 CFR 1024.30-.41

must be clear and conspicuous, in writing, and in a

form that a recipient may keep. The disclosures

may be provided in electronic form, subject to

consumer consent and the provisions of E-Sign,

and a servicer may use commonly accepted or

readily understandable abbreviations. Disclosures

may be made in a language other than English,

provided that they are made in English upon a

recipient’s request.

Additional Information, Disclosures Required

by other Laws—12 CFR 1024.32(b)

Servicers may include additional information in

disclosures required under 12 CFR 1024.30-41 or

combine these disclosures with any disclosure

required by other law unless doing so is expressly

prohibited by 12 CFR 1024.30-41, by other appli-

cable law (such as the Truth in Lending Act or Truth

in Savings Act), or by the terms of an agreement

with a federal or state regulatory agency.

Mortgage Servicing Transfer

Disclosures—12 CFR 1024.33

The disclosures related to the transfer of mortgage

servicing generally are required for any mortgage

loan, as that term is defined in 12 CFR 1024.31,

except that the servicing disclosure statement

required under 12 CFR 1024.33(a) is required only

for reverse mortgage transactions.

Servicing Disclosure Statement—12 CFR

1024.33(a)

A lender, mortgage broker who anticipates using

table funding, or dealer in a first-lien dealer loan

that receives an application for a reverse mortgage

transaction is required to provide the servicing

disclosure statement to the borrower within three

days (excluding legal public holidays, Saturdays,

and Sundays) after receipt of the application. The

disclosure statement must advise whether the

servicing of the mortgage loan may be assigned,

sold, or transferred to any other person at any time.

A model disclosure statement is set forth in

appendix MS-1.

If the institution denies the borrower’s application

within the three-day period, it is not required to

provide the disclosure statement.

Notices of Transfer of Loan Servicing—

12 CFR 1024.33(b)

When any mortgage loan, as that term is defined in

12 CFR 1024.31, is assigned, sold or transferred,

the transferor (former servicer) generally must

provide a disclosure at least 15 days before the

effective date of the transfer. Generally, a transfer

of servicing notice from the transferee (new ser-

vicer) must be provided not more than 15 days

after the effective date of the transfer. Generally,

both notices may be combined into one notice if

delivered to the borrower at least 15 days before

the effective date of the transfer. Notices provided

at the time of settlement satisfy the timing require-

ments.

The disclosure must include

• the effective date of the transfer

• the name, address, and toll-free or collect-call

telephone number for an employee or depart-

ment of the transferee servicer that can be

contacted by the borrower to obtain answers to

servicing transfer inquiries

• the name, address, and toll-free or collect-call

telephone number for an employee or depart-

ment of the transferor servicer that can be

contacted by the borrower to obtain answers to

servicing transfer inquiries

• the date on which the transferor servicer will

cease accepting payments relating to the loan,

and the date on which the transferee servicer will

begin to accept such payments. The dates must

be either the same or consecutive dates.

14. 15 U.S.C. 7001 et seq.

Real Estate Settlement Procedures Act

14 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

• whether the transfer will affect the terms or the

availability of optional insurance and any action

the borrower must take to maintain such cover-

age

• a statement that the transfer does not affect the

terms or conditions of the mortgage (except as

directly related to servicing)

The 2013–14 amendments modified the disclosure

in Appendix MS-2 that servicers may use to comply

with the mortgage servicing transfer disclosure.

The following transfers are not considered an

assignment, sale, or transfer of mortgage loan

servicing for purposes of this requirement if there is

no change in the payee, address to which payment

must be delivered, account number, or amount of

payment due:

• transfers between affiliates;

• transfers resulting from mergers or acquisitions

of servicers or subservicers; and

• transfers between master servicers, when the

subservicer remains the same.

Additionally, the Federal Housing Administration

(FHA) is not required to provide a notice of transfer

to the borrower where a mortgage insured under

the National Housing Act is assigned to FHA.

Borrower Payments during Transfer of

Servicing—12 CFR 1024.33(c)

During the 60-day period beginning on the date of

transfer, no late fee or other penalty can be

imposed on a borrower who has made a timely

payment to the transferor servicer (former servicer).

Additionally, if the transferor servicer (former ser-

vicer) receives any incorrect payments on or after

the effective date of the transfer, the transferor

servicer must either transfer the payment to the

transferee servicer (new servicer) or return the

payment and inform the payor of the proper

recipient of the payment.

Timely Escrow Payments and Treatment

of Escrow Account Balances—12 CFR

1024.34

Servicers must comply with requirements concern-

ing the treatment of escrow funds, which apply to

any mortgage loan, as that term is defined in 12

CFR 1024.31.

If the terms of a mortgage loan require the

borrower to make payments to the servicer for

deposit into an escrow account to pay taxes,

insurance premiums, and other charges, the ser-

vicer shall make payments from the escrow ac-

count in a timely manner. A payment is made in a

timely manner if it is made on or before the deadline

to avoid a penalty.

Generally, the servicer must return any amounts

remaining in escrow within the servicer’s control

within 20 days (excluding legal public holidays,

Saturdays, and Sundays) after the borrower pays

the mortgage loan in full, unless the borrower and

servicer agree to credit the remaining funds

towards an escrow account for certain new mort-

gage loans. The rule does not prohibit servicers

from netting any funds remaining in an escrow

account against the outstanding balance of the

borrower’s mortgage loan.

Error Resolution Procedures—12 CFR

1024.35

Servicers must comply with error resolution proce-

dures that are triggered when a borrower submits

an error notice to the servicer. The requirements set

forth in 12 CFR 1024.35 apply to any mortgage

loan, as that term is defined in 12 CFR 1024.31.

The CFPB has issued an advisory opinion

clarifying that, because borrowers initiate the error

resolution process, a servicer’s communications

with a borrower regarding an error notice are not

subject to the “cease communication” provision of

the Fair Debt Collection Practices Act (FDCPA)

unless the borrower specifically withdraws the

request for action regarding the error.

Notice of Error—12 CFR 1024.35(a)

An error notice must be in writing and identify the

borrower’s name, information that allows the ser-

vicer to identify the borrower’s account, and the

alleged error. A qualified written request that

asserts an error relating to the servicing of a

mortgage loan is an error notice, and the servicer

must comply with all of the error notice require-

ments with respect to such qualified written re-

quest.

The commentary clarifies that a servicer should

not rely solely on the borrower’s description of a

submission to determine whether it is an error

notice, an information request, or both. For ex-

ample, a borrower may submit a letter titled “Notice

of Error” that indicates that the borrower wants to

receive the information set forth in an annual

escrow account statement and asserts an error for

the servicer’s failure to provide that statement.

Such a letter could be both an error notice and an

information request, and the servicer must evaluate

whether the letter fulfills the substantive require-

ments of an error notice, information request, or

both.

15. CFPB Bulletin 2013-12.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 15 (11/15)

Scope of Error Resolution—12 CFR

1024.35(b)

The error resolution procedures apply to the

following alleged errors:

• failure to accept a payment that complies with the

servicer’s written requirements

• failure to apply an accepted payment to princi-

pal, interest, escrow, or other charges as re-

quired by the mortgage loan and applicable law

• failure to credit a payment to the borrower’s

account as of the date the servicer received it, as

required by 12 CFR 1026.36(c)(1)

• failure to pay taxes, insurance premiums, or other

charges by the due date, as required by 12 CFR

1024.34(a)

• failure to refund an escrow account balance

within 20 days (excluding legal public holidays,

Saturdays, and Sundays) after the borrower pays

the mortgage loan in full, as required by 12 CFR

1024.34(b)

• imposition of a fee or charge without a reason-

able basis to do so

• failure to provide an accurate payoff balance

amount upon the borrower’s request, as required

by 12 CFR 1026.36(c)(3)

• failure to provide accurate information to a

borrower regarding loss mitigation options and

foreclosure, as required by 12 CFR 1024.39

• failure to transfer accurate and timely information

relating to servicing to a transferee servicer

• making the first notice or filing for a judicial or

non-judicial foreclosure process before the time

periods allowed by 12 CFR 1024.41(f) and (j)

• moving for foreclosure judgment or order of sale

or conducting a foreclosure sale in violation of 12

CFR 1024.41(g) or (j)

• any other error relating to the servicing of a

borrower’s mortgage loan

The commentary gives examples of errors not

covered by 12 CFR 1024.35(b), such as errors

relating to: (i) the origination of a mortgage loan; (ii)

the underwriting of a mortgage loan; (iii) a subse-

quent sale or securitization of a mortgage loan; and

(iv) a determination to sell, assign, or transfer the

servicing of a mortgage loan (unless it concerns

the failure to transfer accurate and timely informa-

tion relating to the servicing of the borrower’s

mortgage loan account to a transferee servicer).

Contact Information—12 CFR 1024.35(c)

If the servicer establishes an address to which

borrowers must send error notices, the servicer

must provide written notice of the address to the

borrower with specified content. The commentary

states that the servicer must also include this

address on the following communications: (i) any

periodic statement or coupon book required under

12 CFR 1026.41; (ii) any website the servicer

maintains in connection with the servicing of the

loan; and (iii) any notice required pursuant to 12

CFR 1024.39 (early intervention) or 12 CFR 1024.41

(loss mitigation) that includes contact information

for assistance. The servicer must use the same

address for receiving information requests under

12 CFR 1024.36(b) and provide written notice to

the borrower before changing the address to which

the borrower must send error notices.

Acknowledgement of Receipt—12 CFR

1024.35(d)

The servicer generally must provide a written

acknowledgment to the borrower within five days

(excluding legal public holidays, Saturdays, and

Sundays) after receiving the error notice.

Response to an Error Notice—12 CFR

1024.35(e)

A servicer generally has 30 days (excluding legal

public holidays, Saturdays, and Sundays) from

receipt of the error notice to investigate and

respond to the notice, except that a servicer may

extend this period by an additional 15 days

(excluding legal public holidays, Saturdays, and

Sundays) if, prior to the expiration of the original

30-day period, it notifies the borrower in writing of

the extension and the reasons for it.

A servicer must respond within seven days

(excluding legal public holidays, Saturdays, and

Sundays) if the alleged error is a failure to provide

an accurate payoff balance amount, and a servicer

must respond by the earlier of 30 days (excluding

legal public holidays, Saturdays, and Sundays) or

the date of a foreclosure sale if the error involves

either (i) making the first notice or filing for a judicial

or non-judicial foreclosure process before the time

periods allowed by 12 CFR 1024.41(f) or (j), or (ii)

moving for foreclosure judgment or order of sale or

conducting a foreclosure sale in violation of 12 CFR

1024.41(g) or (j).

In response to the notice of error, the servicer

must either correct the error or conduct a reason-

able investigation and determine that no error

occurred. The servicer must also send a written

response to the borrower that accomplishes one of

the following:

• If the servicer corrects the alleged error. The

servicer must advise the borrower of the correc-

tion and when the correction took effect, and

Real Estate Settlement Procedures Act

16 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

provide contact information, including phone

number, for further assistance;

• If the servicer determines that it committed an

error or errors different than or in addition to those

identified by the borrower. The servicer must

correct the error and advise the borrower of the

correction and when the correction took effect,

and provide contact information, including phone

number, for further assistance; or

• If the servicer determines after a reasonable

investigation that no error occurred. The servicer

must state that it determined that no error

occurred, the reasons for its determination, and

the borrower’s right to request documents relied

upon by the servicer in reaching its determination

and how the borrower can make such a request,

and provide contact information, including phone

number, for further assistance. If the borrower

requests those documents, the servicer generally

must provide them within 15 days (excluding

legal public holidays, Saturdays, and Sundays)

at no cost to the borrower. The servicer need not

provide documents that constitute confidential,

proprietary, or privileged information.

As a part of its investigation of the asserted error,

the servicer may request supporting documenta-

tion from the borrower, but the servicer must

conduct a reasonable investigation even if the

borrower does not provide supporting documenta-

tion.

Early Correction or Error Asserted before

Foreclosure Sale—12 CFR 1024.35(f)

A servicer is not required to provide the five-day

acknowledgement notice (12 CFR 1024.35(d)) or

the response notice (12 CFR 1024.35(e)) if either

• the servicer corrects the asserted errors and

notifies the borrower of the correction within five

days (excluding legal public holidays, Saturdays,

and Sundays) after receiving the error notice; or

• the servicer receives the error notice seven or

fewer days before a foreclosure sale and the

asserted error concerns the timing of the foreclo-

sure process under 12 CFR 1024.35(b)(9) or

(10). In this instance, the servicer must make a

good faith attempt to respond to the borrower,

either orally or in writing, and either correct the

error or state the reason the servicer has

determined that no error occurred.

Requirements Not Applicable—12 CFR

1024.35(g)

A servicer does not need to provide the five-day

acknowledgement notice (12 CFR 1024.35(d)),

provide the response notice (12 CFR 1024.35(e)),

or refrain from providing adverse information to

credit reporting agencies for 60 days (12 CFR

1024.35(i)) if the servicer reasonably determines

any of the following apply:

• Duplicative notice of error. The asserted error is

substantially the same as a previously asserted

error for which the servicer complied with the

obligation to respond, unless the borrower pro-

vides new and material information to support the

asserted error. New and material information is

information that is reasonably likely to change the

servicer’s prior determination about the error;

• Overbroad notice of error. The error notice is

overbroad if the servicer cannot reasonably

determine the specific alleged error. The com-

mentary provides examples of overbroad no-

tices, including those that assert errors regarding

substantially all aspects of the mortgage loan

(including origination, servicing, and foreclo-

sure), notices that resemble legal pleadings and

demand a response to each numbered para-

graph, or notices that are not reasonably under-

standable or contain voluminous tangential infor-

mation such that a servicer cannot reasonably

identify from the notice any error that requires a

response. Note that if a servicer concludes an

error notice as submitted is overbroad, the

servicer must still provide a five-day acknowledg-

ment notice and a subsequent response to the

extent the servicer can identify an appropriate

error notice within the submission; or

• Untimely notice of error. The error notice is sent

more than one year after either the mortgage loan

was discharged or the servicer receiving the

notice of error transferred the mortgage loan to

another servicer. For purposes of this provision, a

mortgage loan is discharged when both the debt

and all corresponding liens have been extin-

guished or released, as applicable.

If a servicer determines that any of these three

exceptions apply, it must provide written notice to

the borrower within five days (excluding legal

public holidays, Saturdays, and Sundays) after

making that determination, including the basis

relied upon.

Payment Requirements Prohibited—12 CFR

1024.35(h)

A servicer may not charge a fee or require a

borrower to make any payments as a condition to

responding to an error notice.

Effect on Servicer Remedies—12 CFR

1024.35(i)

In the 60-day period after receiving an error notice,

a servicer may not furnish adverse information to

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 17 (11/15)

any consumer reporting agency regarding any

payment that is the subject of the error notice.

Requests for Information—12 CFR

1024.36

Servicers must follow certain procedures in re-

sponse to a borrower’s written request for informa-

tion with respect to the borrower’s mortgage loan.

The request must include the borrower’s name,

information that allows the servicer to identify the

borrower’s account, and the requested information

related to the borrower’s mortgage loan. The

request can be from the borrower or the borrower’s

agent; a servicer may undertake reasonable pro-

cedures to determine if an alleged agent has

authority from the borrower to act as the borrower’s

agent. A qualified written request that requests

information relating to the servicing of a mortgage

loan is an information request, and the servicer

must comply with all of the information request

requirements with respect to such a qualified

written request.

The requirements set forth in 12 CFR 1024.36

apply to any mortgage loan, as that term is defined

in 12 CFR 1024.31.

The CFPB has issued an advisory opinion

clarifying that, because borrowers initiate requests

for information, a servicer’s communications with a

borrower regarding such a request for information

are not subject to the FDCPA’s “cease communi-

cation” provision, unless the borrower specifically

withdraws the information request.

Contact Information—12 CFR 1024.36(b)

If the servicer establishes an address to which

borrowers must send information requests, the

servicer must provide written notice of the address

to the borrower with specified information. The

commentary states that the servicer must also

include this address on the following communica-

tions: (i) any periodic statement or coupon book

required under 12 CFR 1026.41, (ii) any website the

servicer maintains in connection with the servicing

of the loan, and (iii) any notice required pursuant to

12 CFR 1024.39 (early intervention) or 12 CFR

1024.41 (loss mitigation) that includes contact

information for assistance. The servicer must use

the same address for receiving error notices under

12 CFR 1024.35(b) and provide written notice to

the borrower before changing the address to which

the borrower must send information requests.

Acknowledgement of Receipt—12 CFR

1024.36(c)

The servicer generally must provide a written

acknowledgment to the borrower within five days

(excluding legal public holidays, Saturdays, and

Sundays) after receiving the information request.

Response to Information Request—12 CFR

1024.36(d)

A servicer generally must respond in writing to an

information request within 30 days (excluding legal

public holidays, Saturdays, and Sundays) of re-

ceipt, except that a servicer may extend this period

by an additional 15 days (excluding legal public

holidays, Saturdays, and Sundays) if, prior to the

expiration of the original 30-day period, it notifies

the borrower in writing of the extension and the

reasons for it. A servicer must respond within 10

days (excluding legal public holidays, Saturdays,

and Sundays) after receiving the request, if the

borrower requested the identity or contact informa-

tion for the owner or assignee of a mortgage loan.

The servicer must respond in writing by either

• providing the requested information and contact

information, including phone number, for further

assistance; or

• conducting a reasonable search for the informa-

tion and advising the borrower that the servicer

has determined that the requested information is

not available to it, the basis for the servicer’s

determination, and contact information, including

phone number, for further assistance.

Information is not available if it is not in the

servicer’s control or possession, or the servicer

cannot retrieve it in the ordinary course of business

through reasonable efforts. The commentary gives

examples of when information is or is not available.

Early Response—12 CFR 1024.36(e)

The five-day receipt acknowledgement (12 CFR

1024.36(c)) and the response (12 CFR 1024.36(d))

requirements do not apply if the servicer provides

the requested information and contact information,

including phone number, for further assistance

within five days (excluding legal public holidays,

Saturdays, and Sundays) after receiving the infor-

mation request.

Requirement Not Applicable—12 CFR

1024.36(f)

The five-day receipt acknowledgement (12 CFR

1024.36(c)) and the response notice (12 CFR

1024.36(d)) requirements also do not apply if the

servicer reasonably determines any of the following

16. CFPB Bulletin 2013-12.

Real Estate Settlement Procedures Act

18 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

exceptions apply:

• The information requested is substantially the

same information that the borrower previously

requested.

• The information requested is confidential, propri-

etary, or privileged.

• The information requested is not directly related

to the borrower’s mortgage loan account. The

commentary provides examples of irrelevant

information, including information related to the

servicing of mortgage loans other than the

borrower’s loan and investor instructions or

requirements for servicers regarding the negotia-

tion or approval of loss mitigation options.

• The information request is overbroad or unduly

burdensome. A request is overbroad if the

borrower requests that the servicer provide an

unreasonable volume of documents or informa-

tion. A request is unduly burdensome if a diligent

servicer could not respond within the time

periods set forth in 12 CFR 1024.36(d)(2) or

would incur costs (or have to dedicate resources)

that would be unreasonable in light of the

circumstances. The commentary provides ex-

amples of overbroad or unduly burdensome

requests, such as requests that seek documents

relating to substantially all aspects of mortgage

origination, mortgage servicing, mortgage sale or

securitization, and foreclosure, as well as re-

quests that require servicers to provide informa-

tion in a specific format or seek information that is

not reasonably likely to assist the borrower. If an

information request as submitted is overbroad or

unduly burdensome, the servicer must still pro-

vide the five-day acknowledgment of receipt and

subsequent response if the servicer can reason-

ably identify an appropriate information request

within the submission.

• The information request is sent more than one

year after either the mortgage loan was dis-

charged or the servicer receiving the information

request transferred the mortgage loan to another

servicer. For purposes of this provision, a mort-

gage loan is discharged when both the debt and

all corresponding liens have been extinguished

or released, as applicable.

If a servicer determines that any of these five

exceptions apply, it must provide written notice to

the borrower within five days (excluding legal

public holidays, Saturdays, and Sundays) after

making that determination, including the basis

relied on.

Payment Requirement Limitations—12 CFR

1024.36(g)

A servicer generally may not charge a fee, or

require a borrower to make any payment that may

be owed on a borrower’s account, as a condition of

responding to an information request. A servicer

may charge for providing a beneficiary notice

under applicable state law, if such a fee is not

otherwise prohibited by applicable law.

Force-Placed Insurance—12 CFR

1024.37

Servicers must comply with restrictions on obtain-

ing and assessing charges and fees for force-

placed insurance, defined as hazard insurance

that a servicer obtains on behalf of the owner or

assignee to insure the property securing the

mortgage loan (but does not include (i) flood

insurance required by the Flood Disaster Protection

Act of 1973, (ii) hazard insurance obtained by a

borrower but renewed by the borrower’s servicer in

accordance with 12 CFR 1024.17(k)(1), (2), or (5),

or (iii) hazard insurance obtained by a borrower but

renewed by the borrower’s servicer with the

borrower’s agreement). The requirements set forth

in 12 CFR 1024.37 apply to any mortgage loan, as

that term is defined in 12 CFR 1024.31.

The CFPB has issued an advisory opinion

clarifying that, because the Dodd-Frank Act spe-

cifically mandates certain disclosures regarding

force-placed insurance without any mention of the

FDCPA’s “cease communication” provisions, a

servicer acting as a debt collector does not violate

the FDCPA’s “cease communication” provision by

providing the notices required under 12 CFR

1024.37.

Requirements before Charging for

Force-Placed Insurance—12 CFR

1024.37(b), (c), (d)

Servicers may not assess charges or fees for

force-placed insurance unless the servicer satisfies

four requirements.

First, the servicer must have a reasonable basis

to believe that the borrower has failed to maintain

required hazard insurance. The commentary states

that information about a borrower’s hazard insur-

ance received by the servicer from the borrower,

the borrower’s insurance provider, or the borrow-

er’s insurance agent, may provide a servicer with a

reasonable basis. If a servicer receives no such

information, the servicer may satisfy the reasonable

basis standard if the servicer acts with reasonable

diligence to ascertain the borrower’s hazard insur-

ance status and does not receive evidence of

hazard insurance.

Second, the servicer must mail or deliver an

17. CFPB Bulletin 2013-12.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 19 (11/15)

initial written notice to the borrower at least 45 days

before assessing a charge or fee related to

force-placed insurance. The servicer’s notice must

identify the following:

• the date of the notice;

• the servicer’s name and mailing address;

• the borrower’s name and mailing address;

• a statement requesting that the borrower provide

hazard insurance information for the borrower’s

property and identifying the property by its

physical address;

• a statement that the borrower’s hazard insurance

has expired or is expiring, that the servicer lacks

evidence that the borrower has hazard insurance

coverage past the expiration date, and if appli-

cable, identifies the type of hazard insurance

lacking;

• a statement that hazard insurance is required on

the borrower’s property and that the servicer has

purchased or will purchase insurance at the

borrower’s expense;

• a request that the borrower promptly provide the

servicer with insurance information;

• a description of the requested insurance informa-

tion and how the borrower may provide such

information, and if applicable, that the requested

information must be in writing;

• a statement that the insurance coverage the

servicer has purchased or will purchase may

cost significantly more than, and provide less

coverage than, hazard insurance purchased by

the borrower;

• the servicer’s phone number for borrower inqui-

ries; and

• a statement advising that the borrower review

additional information provided in the same

transmittal (if applicable).

Other than the specific statements listed above,

the servicer cannot provide any information on the

initial notice, though the servicer can provide

additional information on separate pages of paper

contained in the same mailing. Certain information

must be provided in bold text. Appendix MS-3(A)

contains a form notice that servicers may use.

Third, the servicer must send a reminder notice

at least 30 days after the initial notice is mailed or

delivered and at least 15 days before the servicer

assesses charges or fees. If the servicer has

previously received no hazard insurance informa-

tion in response to the initial notice, the reminder

notice must contain the date of the reminder notice

and all of the other information provided in the initial

notice, as well as (i) advise that it is a second and

final notice, and (ii) identify the annual cost of

force-placed insurance, or if unknown, a reason-

able estimate of that cost.

If the servicer has received hazard insurance

information but not evidence that the coverage has

been in place continuously, the reminder notice

must identify the following:

• the date of the notice;

• the servicer’s name and mailing address;

• the borrower’s name and mailing address;

• a statement requesting that the borrower provide

hazard insurance information for the borrower’s

property and that identifies the property by its

physical address;

• the servicer’s phone number for borrower inqui-

ries;

• a statement advising that the borrower review

additional information provided in the same

transmittal (if applicable);

• a statement that it is the second and final notice;

• the annual cost of force-placed insurance, or if

unknown, a reasonable estimate of that cost;

• a statement that the servicer has received the

hazard insurance information that the borrower

provided;

• a request that the borrower provide the missing

information; and

• a statement that the borrower will be charged for

insurance the servicer purchases during the time

period in which the servicer cannot verify cover-

age.

Other than the specific statements listed above,

the servicer cannot provide any additional informa-

tion on the reminder notice, though the servicer can

provide additional information on separate pages

of paper contained in the same transmittal. Certain

information must be provided in bold text. Appen-

dix MS-3 contains sample reminder notices at

forms MS-3(B) and MS-3(C). If a servicer receives

new information about a borrower’s hazard insur-

ance after the required written notice has been put

into production, the servicer is not required to

update the notice if the written notice was put into

production a reasonable time prior to the servicer

delivering the notice to the borrower or placing the

notice in the mail.

Fourth, by the end of the 15-day period after the

servicer sends the reminder notice, the servicer

must not have received evidence that the borrower

has had required hazard insurance continuously in

place. As evidence, the servicer may require a

copy of the borrower’s hazard insurance policy

declaration page, the borrower’s insurance certifi-

cate, the borrower’s insurance policy, or other

similar forms of written confirmation.

Real Estate Settlement Procedures Act

20 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

Renewing Force-Placed Insurance—12 CFR

1024.37(e)

A servicer must comply with two requirements

before assessing charges or fees on a borrower to

renew or replace existing force-placed insurance.

First, the servicer must provide 45-day advance

written notice. This renewal notice must provide the

following information:

• the date of the renewal notice;

• the servicer’s name and mailing address;

• the borrower’s name and mailing address;

• a request that the borrower update the hazard

insurance information and that identifies the

property by its physical address;

• a statement that the servicer previously pur-

chased force-placed insurance at the borrower’s

expense because the servicer did not have

evidence that the borrower had hazard insurance

coverage;

• a statement that the force-placed insurance is

expiring or has expired and that the servicer

intends to renew or replace it because hazard

insurance is required on the property;

• a statement that the insurance coverage the

servicer has purchased or will purchase may

cost significantly more than, and provide less

coverage than, hazard insurance purchased by

the borrower, and identifying the annual cost (or

if unknown, a reasonable estimate) of force-

placed insurance;

• a statement that if the borrower purchases

hazard insurance, the borrower should promptly

advise the servicer;

• a description of the requested insurance informa-

tion and how the borrower may provide such

information, and if applicable, that the requested

information must be in writing;

• the servicer’s telephone number for borrower

inquiries; and

• a statement advising the borrower to review

additional information provided in the same

transmittal (if applicable).

Other than the specific statements listed above,

the servicer cannot provide any additional informa-

tion on the renewal notice, though the servicer can

provide additional information on separate pages

of paper contained in the same transmittal. Certain

information must be provided in bold text. Appen-

dix MS-3(D) contains a form notice that servicers

may use.

Second, by the end of the 45-day notice period,

the servicer must not have received evidence

demonstrating that the borrower has purchased

required hazard insurance coverage.

Notwithstanding these two requirements, if not

prohibited by state or other applicable law, if the

servicer receives evidence that the borrower lacked

insurance for some period of time after the existing

force-placed insurance expired, the servicer may

promptly assess a premium charge or fee related

to renewing or replacing the existing force-placed

insurance for that period of time.

The servicer must mail or deliver the renewal

notice before each anniversary of purchasing

force-placed insurance, though the servicer need

not send the renewal notice more than once per

year.

Mailing the Notices—12 CFR 1024.37(f)

If the servicer mails the initial notice, the reminder

notice, or the renewal notice, the servicer must use

at least first-class mail.

Canceling Force-Placed Insurance—12 CFR

1024.37(g)

If the servicer receives evidence that the borrower

has had required hazard insurance coverage in

place, then the servicer has 15 days to cancel the

force-placed insurance, refund force-placed insur-

ance premium charges and fees for the period of

overlapping insurance coverage, and remove all

force-placed charges and fees from the borrower’s

account for that period.

Limitations on Force-Placed Insurance—

12 CFR 1024.37(h)

All charges that a servicer assesses on a borrower

related to force-placed insurance must be bona

fide and reasonable, except for charges subject to

state regulation and charges authorized by the

Flood Disaster Protection Act of 1973. A bona fide

and reasonable charge is one that is reasonably

related to the servicer’s cost of providing the

service and is not otherwise prohibited by law.

General Servicing Policies, Procedures,

and Requirement—12 CFR 1024.38

Servicers must maintain policies and procedures

reasonably designed to achieve certain servicing-

related objectives, and are subject to requirements

regarding record retention and the ability to create

servicing files.

These requirements apply to any mortgage loan,

as that term is defined in 12 CFR 1024.31, except

that they do not apply to (i) small servicers, (ii)

reverse mortgage transactions, as that term is

defined in 12 CFR 1024.31, or (iii) mortgage loans

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 21 (11/15)

for which the servicer is a qualified lender. As noted

above, an institution qualifies as a small servicer if

it either (a) services, together with any affiliates,

5,000 or fewer mortgage loans, as that term is

defined in 12 CFR 1026.41(a)(1), for all of which the

institution (or an affiliate) is the creditor or assignee,

(b) is a Housing Finance Agency, as defined in 24

CFR 266.5, or (c) is a nonprofit entity (defined in 12

CFR 1026.41(e)(4)(ii)(C)(1)) that services 5,000 or

fewer mortgage loans, including any mortgage

loans serviced on behalf of associated nonprofit

entities (defined in 12 CFR 1026.41(e)(4)(ii)(C)(2)),

for all of which the servicer or an associated

nonprofit entity is the creditor.

Qualified lenders are those defined to be quali-

fied lenders under the Farm Credit Act of 1971 and

the Farm Credit Administration’s accompanying

regulations set forth at 12 CFR 617.7000 et seq.

Reasonable Policies and Procedures—

12 CFR 1024.38(a)

Servicers must maintain policies and procedures

reasonably designed to meet the objectives iden-

tified in 12 CFR 1024.38(b). Servicers may deter-

mine the specific policies and procedures they will

adopt and the methods for implementing them in

light of the size, nature, and scope of the servicers’

operations, including, for example, the volume and

aggregate unpaid principal balance of mortgage

loans serviced, the credit quality (including the

default risk) of the mortgage loans serviced, and

the servicer’s history of consumer complaints.

“Procedures” refer to the servicer’s actual prac-

tices for achieving the objective.

Objectives—12 CFR 1024.38(b)

Servicers are required to maintain policies and

procedures that are reasonably designed to achieve

the following objectives.

1. Accessing and providing timely and accurate

information. The servicer’s policies and proce-

dures must be reasonably designed to ensure

that the servicer can

a. provide accurate and timely disclosures to

the borrower;

b. investigate, respond to, and make correc-

tions in response to borrowers’ complaints.

These policies and procedures must be

reasonably designed to ensure that the

servicer can promptly obtain information

from service providers to facilitate investiga-

tion and correction of errors resulting from

actions of service providers;

c. provide a borrower with accurate and timely

information and documents in response to

the borrower’s request for information with

respect to the borrower’s mortgage loan;

d. provide owners and assignees of mortgage

loans with accurate information and docu-

ments about all the mortgage loans that they

own. This includes information about a

servicer’s evaluations of borrowers for loss

mitigation options and a servicer’s loss

mitigation agreements with borrowers, includ-

ing loan modifications. Such information

includes, for example: (a) a loan modifica-

tion’s date, terms, and features; (b) the

components of any capitalized arrears; (c)

the amount of any servicer advances; and

(d) any assumptions regarding the value of

property used in evaluating any loss mitiga-

tion options;

e. submit documents or filings required for a

foreclosure process, including documents or

filings required by a court, that reflect

accurate and current information and that

comply with applicable law;

f. upon notification of a borrower’s death,

promptly identify and facilitate communica-

tion with the borrower’s successor in interest

concerning the secured property.

2. Properly evaluating loss mitigation applications.

The servicer’s policies and procedures must be

reasonably designed to ensure that the servicer

can

a. provide accurate information regarding loss

mitigation options available to the borrower

from the owner or assignee of the borrower’s

loan;

b. identify specifically all loss mitigation options

available to a borrower from the owner or

assignee of the borrower’s mortgage loan.

This includes identifying, with respect to

each owner or assignee all of the loss

mitigation options the servicer may consider

when evaluating a borrower, as well as the

criteria the servicer should apply for each

option. The policies and procedures should

be reasonably designed to address how the

servicer will apply any specific thresholds for

eligibility for particular loss mitigation options

established by an owner or assignee of a

mortgage loan (e.g., if the owner requires

that a particular option be limited to a certain

percentage of loans, then the policies and

18. The definition of small servicer is set forth at 12 CFR

1026.41(e)(4)(ii).

19. 12 CFR 617.7000 defines a qualified lender as (i) a system

institution (except a bank for cooperatives) that extends credit to

a farmer, rancher, or producer or harvester of aquatic products for

any agricultural or aquatic purpose and other credit needs of the

borrower, and (ii) other financing institutions with respect to loans

discounted or pledged under section 1.7(b)(1)(B) of the Farm

Credit Act.

Real Estate Settlement Procedures Act

22 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

procedures must be reasonably designed to

determine in advance how the servicer will

apply that threshold). The policies and

procedures must be reasonably designed to

ensure that such information is readily acces-

sible to the servicer’s loss mitigation person-

nel.

c. provide the loss mitigation personnel as-

signed to the borrower’s mortgage loan with

prompt access to all of the documents and

information that the borrower submitted in

connection with a loss mitigation option;

d. identify the documents and information a

borrower must submit to complete a loss

mitigation application, and facilitate compli-

ance with the notice required pursuant to 12

CFR 1024.41(b)(2)(i)(B);

e. in response to a complete loss mitigation

application, properly evaluate the borrower

for all eligible loss mitigation options pursu-

ant to any requirements established by the

owner or assignee of the mortgage loan,

even if those requirements are otherwise

beyond the requirements of 12 CFR 1024.41.

For example, an owner or assignee may

require that the servicer review a loss

mitigation application submitted less than 37

days before a foreclosure sale or re-evaluate

a borrower who has demonstrated a material

change in financial circumstances.

3. Facilitating oversight of, and compliance by,

service providers. The servicer’s policies and

procedures must be reasonably designed to

ensure that the servicer can

a. provide appropriate personnel with access

to accurate and current documents and

information concerning service providers’

actions;

b. facilitate periodic reviews of service provid-

ers;

c. facilitate the sharing of accurate and current

information regarding the status of any

evaluation of a borrower’s loss mitigation

application and any foreclosure proceeding

among appropriate servicer personnel, in-

cluding the loss mitigation personnel as-

signed the borrower’s mortgage loan, and

appropriate service provider personnel, in-

cluding service provider personnel respon-

sible for handling foreclosure proceedings.

4. Facilitating transfer of information during servic-

ing transfers.

a. Transferor Servicer. The servicer’s policies

and procedures must be reasonably de-

signed to ensure that when it transfers a

mortgage loan to another servicer, it (i) timely

and accurately transfers all information and

documents in its possession and control

related to a transferred mortgage loan to the

transferee servicer, and (ii) transfers the

information and documents in a form and

manner that ensures their accuracy and that

allows the transferee to comply with the

terms of the mortgage loan and applicable

law. For example, where data are transferred

electronically, a transferor servicer must

have policies and procedures reasonably

designed to ensure that data can be properly

and promptly boarded by a transferee ser-

vicer’s electronic systems. The information

that must be transferred includes information

reflecting the current status of discussions

with the borrower concerning loss mitigation

options, any loss mitigation agreements

entered into with the borrower, and analysis

the servicer performed with respect to poten-

tial recovery from a non-performing mort-

gage loan.

b. Transferee Servicer. The servicer’s policies

and procedures must be reasonably de-

signed to ensure that when it receives a

mortgage loan from another servicer, it can

(i) identify necessary documents or informa-

tion that may not have been transferred, and

(ii) obtain such documentation or information

from the transferor servicer. The servicer’s

policies and procedures must also be rea-

sonably designed to address obtaining miss-

ing information regarding loss mitigation

from the transferor servicer before attempt-

ing to obtain it from the borrower. For

example, if a servicer receives information

indicating that a borrower has made pay-

ments consistent with a trial or permanent

loan modification but the servicer has not

received information about the actual modi-

fication, the servicer must have policies and

procedures reasonably designed to identify

whether any such modification agreement

exists and to obtain any such agreement

from the transferor servicer.

5. Informing borrowers of the written error resolu-

tion and information request procedures.

a. The servicer must have policies and proce-

dures reasonably designed to inform borrow-

ers of the procedures for submitting written

error notices under 12 CFR 1024.35 and

written information requests under 12 CFR

1024.36. A servicer may comply with these

requirements by informing borrowers of these

procedures by notice (mailed or delivered

electronically) or a website. For example, a

servicer may comply with this provision by

including a statement in the 12 CFR 1026.41

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 23 (11/15)

periodic statement advising borrowers that

they have certain rights under federal law

related to resolving errors and requesting

information, that they may learn more about

their rights by contacting the servicer, and

directing borrowers to a website.

b. A servicer’s policies and procedures also

must be reasonably designed to ensure that

the servicer provides borrowers who are

dissatisfied with the servicer’s response to

oral complaints or information requests with

information about submitting a written error

notice or written information request.

c. The commentary addresses the circum-

stance in which a borrower incorrectly sub-

mits an error notice to any address given to

the borrower in connection with the submis-

sion of a loss mitigation application or

continuity of contact. A servicer’s policies

and procedures must be reasonably de-

signed to ensure that the servicer informs a

borrower of the correct procedures for sub-

mitting written error notices under such

circumstances, including the correct ad-

dress. Alternatively, the servicer could redi-

rect the error notice to the correct address.

Standard Requirements—12 CFR 1024.38(c)

Servicers must also retain certain records and

maintain particular documents in a manner that

facilitates compiling such documents and data into

a servicing file.

Record Retention—12 CFR 1024.38(c)(1)

Servicers must retain records that document any

actions the servicer took with respect to a borrow-

er’s mortgage loan account until one year after the

loan is discharged or the servicer transfers servic-

ing for the mortgage loan. Servicers may use any

retention method that reproduces records accu-

rately (such as computer programs) and that

ensures that a servicer can access the records

easily (such as a contractual right to access

records another entity holds).

Servicing File—12 CFR 1024.38(c)(2)

Servicers must maintain the following documents

and data in a manner that facilitates compiling such

documents and data into a servicing file within five

days: a schedule of all credits and debits to the

account (including escrow accounts and suspense

accounts), a copy of the security instrument

establishing the lien securing the mortgage, any

notes created by servicer personnel concerning

communications with the borrower, a report of the

data fields created by the servicer’s electronic

systems relating to the borrower’s account (if

applicable), and copies of any information or

documents provided by the borrower in connection

with error notices or loss mitigation.

For purposes of this section, a report of data

fields relating to a borrower’s account means a

report listing the relevant data fields by name,

populated with any specific data relating to the

borrower’s account. Examples of such data fields

include fields used to identify the terms of the

borrower’s mortgage loan, the occurrence of

automated or manual collection calls, the evalua-

tion of borrower for a loss mitigation option, the

owner or assignee of a mortgage loan, and any

credit reporting history.

These requirements apply only to information

created on or after January 10, 2014.

Early Intervention Requirements for

Certain Borrowers—12 CFR 1024.39

Servicers must engage in certain efforts to contact

delinquent borrowers. These requirements apply to

only those mortgage loans, as that term is defined

in 12 CFR 1024.31, that are secured by the

borrower’s principal residence. The requirements

do not apply to (i) small servicers; (ii) reverse

mortgage transactions, as that term is defined in 12

CFR 1024.31; or (iii) mortgage loans for which the

servicer is a qualified lender.

As noted above, an institution qualifies as a small

servicer if it either (a) services, together with any

affiliates, 5,000 or fewer mortgage loans, as that

term is used in 12 CFR 1026.41(a)(1), for all of

which the institution (or an affiliate) is the creditor or

assignee; (b) is a Housing Finance Agency, as

defined in 24 CFR 266.5; or (c) is a nonprofit entity

(defined in 12 CFR 1026.41(e)(4)(ii)(C)(1)) that

services 5,000 or fewer mortgage loans, including

any mortgage loans serviced on behalf of associ-

ated nonprofit entities (defined in 12 CFR 1026.41

(e)(4)(ii)(C)(2)), for all of which the servicer or an

associated nonprofit entity is the creditor.

Quali-

fied lenders are those defined to be qualified

lenders under the Farm Credit Act of 1971 and the

Farm Credit Administration’s accompanying regu-

lations set forth at 12 CFR 617.7000 et seq. For

purposes of this section, a borrower who is

performing under a loss mitigation agreement is not

considered delinquent and is not covered by this

section.

Live Contact—12 CFR 1024.39(a)

Servicers must make good faith efforts to establish

live contact with a borrower no later than the 36th

day of delinquency. Promptly after establishing live

20. The definition of small servicer is set forth at 12 CFR

1026.41(e)(4)(ii).

Real Estate Settlement Procedures Act

24 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

contact, the servicer must inform the borrower of

any loss mitigation options, if appropriate. The

commentary states that “[d]elinquency begins on

the day a payment sufficient to cover principal,

interest, and, if applicable, escrow for a given

billing cycle is due and unpaid.” Borrowers are not

delinquent if they are performing according to the

terms of a loss mitigation plan, but they become

delinquent if and when they fail to make a payment

required under such a plan.

The commentary also states that good faith

efforts to establish live contact consist of “reason-

able steps under the circumstances,” and these

efforts “may include telephoning the borrower on

more than one occasion or sending written or

electronic communication encouraging the bor-

rower to establish live contact with the servicer.”

It is within the servicer’s reasonable discretion to

determine whether it is appropriate under the

circumstances to inform a borrower of any loss

mitigation options. Examples of a servicer making a

reasonable determination include a servicer inform-

ing a borrower about loss mitigation options after

the borrower notifies the servicer during live

contact of a material adverse change in financial

circumstances that is likely to cause a long-term

delinquency for which loss mitigation options may

be available, or a servicer not providing information

about loss mitigation options to a borrower who has

missed a January 1 payment and notified the

servicer that the full late payment will be transmit-

ted to the servicer by February 15.

Written Notice—12 CFR 1024.39(b)

Servicers must send a borrower a written notice

within 45 days after the borrower becomes delin-

quent. The written notice must encourage the

borrower to contact the servicer, provide the

servicer’s telephone number and address to ac-

cess assigned loss mitigation personnel, describe

examples of loss mitigation options that may be

available (if applicable), provide loss mitigation

application instructions or advise how to obtain

more information about loss mitigation options such

as contacting the servicer (if applicable), and list

either the CFPB’s or HUD’s website to access a list

of homeownership counselors or counseling orga-

nization and HUD’s toll-free number to access

homeownership counselors or counseling organi-

zations.

Appendix MS-4 contains model clauses at MS-4

(A), MS-4(B), and MS-4(C).

A servicer is not required to provide the written

notice under this section to a borrower more than

once in any 180-day period. Accordingly, using the

above example, a servicer who provided the

written notice to the borrower within 45 days after

the borrower became delinquent on January 1

would not be required to send another written

notice if the borrower failed to make the February 1

payment.

Conflicts with other Law—12 CFR 1024.39(c)

Servicers are not required to comply with the live

contact and written notice requirements if doing so

would violate applicable law. Thus, for example, a

servicer does not need to communicate with

borrowers in a way that would be inconsistent with

bankruptcy law.

Exemptions—12 CFR 1024.39(d)

Section 1024.39(d) exempts servicers from the

early intervention requirements in two situations.

1. Borrowers in bankruptcy. A servicer is exempt

from the early intervention requirements for a

mortgage loan while the borrower is a debtor

under the Bankruptcy Code (11 U.S.C. 101 et

seq.).

a. Obligation to resume post-bankruptcy. With

respect to any portion of the mortgage debt

that is not discharged through bankruptcy, a

servicer must resume compliance with the

early intervention requirement after the first

delinquency that follows the earliest of the

following: (i) the borrower’s bankruptcy case

is dismissed; (ii) the borrower’s bankruptcy

case is closed; or (iii) the borrower receives a

general discharge of debts under the Bank-

ruptcy Code. However, a servicer is not

required to communicate with a borrower in

any way that would violate applicable bank-

ruptcy law or a court order in a bankruptcy

case, and a servicer may adapt the early

intervention requirement in any manner be-

lieved necessary. A servicer also is not

required to comply with the early intervention

requirement for any portion of the mortgage

debt that was discharged under the Bank-

ruptcy Code or if a bankruptcy case is

revived.

b. Joint obligors. The bankruptcy exception

applies if two or more borrowers are joint

obligors with primary liability on a mortgage

loan and any one of the borrowers is in

bankruptcy. For example, if a husband and

wife jointly own a home and the husband files

for bankruptcy, the servicer is exempt from

the early intervention requirements as to both

the husband and wife.

2. FDCPA “cease communication” request. A ser-

vicer subject to the FDCPA with respect to the

borrower is exempt from the early intervention

requirements with respect to a mortgage loan for

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 25 (11/15)

which the borrower has sent a “cease commu-

nication” notification pursuant to FDCPA section

805(c) (15 U.S.C. 1692c(c)).

Continuity of Contact—12 CFR 1024.40

Servicers must maintain policies and procedures to

facilitate continuity of contact between the bor-

rower and the servicer.

These requirements apply to only those mort-

gage loans, as that term is defined in 12 CFR

1024.31, that are secured by the borrower’s

principal residence. The requirements do not apply

to (i) small servicers, (ii) reverse mortgage transac-

tions, as that term is defined in 12 CFR 1024.31, or

(iii) mortgage loans for which the servicer is a

qualified lender.

As noted above, an institution qualifies as a small

servicer if it either (a) services, together with any

affiliates, 5,000 or fewer mortgage loans, for all of

which the institution (or an affiliate) is the creditor or

assignee; (b) is a Housing Finance Agency, as

defined in 24 CFR 266.5; or (c) is a nonprofit entity

(defined in 12 CFR 1026.41(e)(4)(ii)(C)(1)) that

services 5,000 or fewer mortgage loans, including

any mortgage loans serviced on behalf of associ-

ated nonprofit entities (defined in 12 CFR 1026.41

(e)(4)(ii)(C)(2)), for all of which the servicer or an

associated nonprofit entity is the creditor.

Qualified lenders are those defined to be quali-

fied lenders under the Farm Credit Act of 1971 and

the Farm Credit Administration’s accompanying

regulations set forth at 12 CFR 617.7000 et seq.

General Continuity of Contact Policies and

Procedures—12 CFR 1024.40(a)

Servicers must have policies and procedures that

are reasonably designed to assign personnel (one

or more persons) to a delinquent borrower at the

time the servicer provides the borrower with the

written notice required under 12 CFR 1024.39(b),

and in any event, not later than the 45th day of the

borrower’s delinquency. The assigned personnel

should be available by telephone to answer the

borrower’s questions and assist the borrower with

available loss mitigation options until the borrower

makes two consecutive timely payments under a

permanent loss mitigation agreement. If the bor-

rower contacts the assigned personnel and does

not receive an immediate live response, the

servicer must have policies and procedures rea-

sonably designed to ensure the servicer can

provide a live response in a timely manner.

Functions of Servicer Personnel—12 CFR

1024.40(b)

The servicer must also maintain policies and

procedures reasonably designed to ensure that the

assigned personnel can perform certain functions,

including: providing the borrower with accurate

information about (1) loss mitigation options avail-

able to the borrower from the owner or assignee of

the borrower’s loan, (2) actions the borrower must

take to be evaluated for such options, including the

steps the borrower needs to take to submit a

complete loss mitigation application and appeal a

denial of a loan modification option (if applicable),

(3) the status of any loss mitigation application the

borrower has submitted, (4) the circumstances

under which the servicer may refer the borrower’s

account to foreclosure, and (5) any loss mitigation

deadlines.

The servicer must also have policies and proce-

dures reasonably designed to ensure that as-

signed personnel are able to (1) timely retrieve a

complete record of the borrower’s payment history

and all written information the borrower has pro-

vided to the servicer (or prior servicers) in connec-

tion with a loss mitigation application, (2) provide

these documents to other people required to

evaluate the borrower for loss mitigation options, if

applicable, and (3) provide the borrower with

information about submitting an error notice or

information request under 12 CFR 1024.35 or 12

CFR 1024.36.

Loss Mitigation Procedures—12 CFR

1024.41

Servicers must comply with certain loss mitigation

procedures. The procedures differ depending on

how far in advance of foreclosure a borrower

submits a loss mitigation application. Regulation X

does not impose a duty on a servicer to provide any

borrower with any specific loss mitigation option.

The requirements set forth in 12 CFR 1024.41

apply to only those mortgage loans, as that term is

defined in 12 CFR 1024.31, that are secured by the

borrower’s principal residence. Except as noted

below in 12 CFR 1024.41(j), the requirements do

not apply to (i) small servicers, (ii) reverse mort-

gage transactions, as that term is defined in 12

CFR 1024.31, or (iii) mortgage loans for which the

servicer is a qualified lender.

As noted above, an institution qualifies as a small

servicer if it either (a) services, together with any

affiliates, 5,000 or fewer mortgage loans, as that

term is used in 12 CFR 1026.41(a)(1), for all of

which the institution (or an affiliate) is the creditor or

assignee; (b) is a Housing Finance Agency, as

defined in 24 CFR 266.5; or (c) is a nonprofit entity

21. The definition of small servicer is set forth at 12 CFR

1026.41(e)(4)(ii).

Real Estate Settlement Procedures Act

26 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

(defined in 12 CFR 1026.41(e)(4)(ii)(C)(1)) that

services 5,000 or fewer mortgage loans, including

any mortgage loans serviced on behalf of associ-

ated nonprofit entities (defined in 12 CFR 1026.41

(e)(4)(ii)(C)(2)), for all of which the servicer or an

associated nonprofit entity is the creditor.

Quali-

fied lenders are those defined to be qualified

lenders under the Farm Credit Act of 1971 and the

Farm Credit Administration’s accompanying regu-

lations set forth at 12 CFR 617.7000 et seq.

The CFPB has issued an advisory opinion

clarifying that, because borrowers submit loss

mitigation applications to servicers, a servicer’s

communications with a borrower regarding such a

loss mitigation application are not subject to the

FDCPA’s “cease communication” provision unless

the borrower specifically withdraws the request for

action on the loss mitigation application.

Receipt of a Loss Mitigation Application—

12 CFR 1024.41(b)

A servicer that receives a loss mitigation applica-

tion at least 45 days before a foreclosure sale must

take two steps.

First, the servicer must promptly review the

application to determine if it is complete. An

application is complete when it contains all the

information the servicer requires from the borrower

in evaluating applications for loss mitigation op-

tions.

Second, the servicer must notify the borrower in

less than five days (excluding legal public holidays,

Saturdays, and Sundays) that it has received the

application and state whether it is complete or

incomplete. If the application is incomplete, the

notice must advise (i) what additional documents or

information are needed and (ii) a reasonable

deadline by which the borrower must submit them.

A reasonable deadline is generally one of the

following that maximizes the borrower’s loss miti-

gation protections, except when that deadline

would make it impracticable to permit the borrower

sufficient time to obtain and submit the needed

information (such as requesting a borrower to

submit documentation in less than seven days): (a)

the date by which any document or information

submitted by the borrower will be stale or invalid,

(b) the 120th day of the borrower’s delinquency, (c)

90 days before a foreclosure sale, or (d) 38 days

before a foreclosure sale. Servicers must exercise

reasonable diligence in obtaining documents and

information to complete an incomplete loss mitiga-

tion application (e.g., promptly contacting the

borrower to obtain missing information or determin-

ing whether information exists in the servicer’s files

already that may provide the information missing

from the borrower’s application).

A loss mitigation application includes oral inqui-

ries by the borrower where the borrower provides

the information a servicer would evaluate in con-

nection with a loss mitigation application. A loss

mitigation application is considered expansively

and includes any request by a borrower that the

servicer determines whether the borrower is “pre-

qualified” for a loss mitigation program by evaluat-

ing the borrower against preliminary criteria.

A loss mitigation application does not include

oral inquiries about loss mitigation options where

the borrower does not provide any information that

the servicer would use to evaluate an application,

including where the borrower requests information

only about the application process but does not

provide any information to the servicer.

If a servicer has informed a borrower that the

application was complete (or identified particular

information needed to complete the application),

and the servicer subsequently determines that

additional information or corrected documents are

required, the servicer must promptly request such

information or documents from the borrower and

treat the application as complete under 12 CFR

1024.41(f)(2) and (g) until the borrower is given a

reasonable opportunity to complete the applica-

tion.

Calculating Time Periods and Determining

Protections—12 CFR 1024.41(b)(3)

Section 1024.41 provides borrowers certain protec-

tions depending on whether the servicer received a

complete loss mitigation application at least a

specified number of days before a foreclosure sale.

See, e.g., 12 CFR 1024.41(c)(1) (37 days); 12 CFR

1024.41(e) and (h) (90 days). These time periods

are calculated as of the date the servicer receives

a complete loss mitigation application. Thus, sched-

uling or rescheduling a foreclosure sale after the

servicer receives the complete loss mitigation

application will not affect the borrower’s protec-

tions.

22. The definition of small servicer is set forth at 12 CFR

1026.41(e)(4)(ii).

23. CFPB Bulletin 2013-12.

24. When a borrower is complying with a payment forbearance

program offered on the basis of an incomplete loss mitigation

application, reasonable diligence would involve notifying the

borrower that the borrower is being offered a payment forbear-

ance program based on an evaluation of an incomplete loss

mitigation application, and that the borrower has the option of

completing the application to receive a full evaluation for all loss

mitigation options available to the borrower. If a servicer provides

such a notification, the borrower remains in compliance with the

payment forbearance program, and the borrower does not

request any further assistance, the servicer could suspend

reasonable diligence efforts until near the end of the payment

forbearance program. Near the end of the program, and prior to

the end of the payment forbearance period, it may be necessary

for the servicer to contact the borrower to determine if the

borrower wishes to complete the application and proceed with a

full loss mitigation evaluation.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 27 (11/15)

If no foreclosure sale is scheduled as of the date

the servicer receives a complete loss mitigation

application, the application is considered received

more than 90 days before a foreclosure sale.

Evaluation of a Loss Mitigation

Application—12 CFR 1024.41(c)

Evaluation of a Timely Complete Loss Mitigation

Application—12 CFR 1024.41(c)(1)

A servicer that receives a complete loss mitigation

application more than 37 days before a foreclosure

sale must take two steps within 30 days:

• First, the servicer must evaluate the borrower for

all loss mitigation options available to the bor-

rower from the owner or investor of the borrower’s

mortgage loan. The criteria on which a servicer

offers or does not offer a loss mitigation option

need not meet any particular standard. Nonethe-

less, a servicer’s failure to follow requirements

imposed by an owner or investor may demon-

strate the servicer’s failure to comply with the 12

CFR 1024.38(b)(2)(v) requirement that the ser-

vicer must maintain policies and procedures that

are reasonably designed to ensure that the

servicer can properly evaluate a borrower for all

loss mitigation options for which the borrower

may be eligible pursuant to any requirements

established by the mortgage loan’s owner or

assignee; and

• Second, the servicer must provide the borrower

with a written notice stating which loss mitigation

options, if any, the servicer will offer to the

borrower. The notice must state the amount of

time the borrower has to accept or reject an

offered loss mitigation option pursuant to 12 CFR

1024.41(e), and, if applicable, that the borrower

has the right to appeal a denial of a loan

modification option as well as the time period and

any requirements for making an appeal pursuant

to 12 CFR 1024.41(h).

Evaluation of Incomplete Loss Mitigation

Application—12 CFR 1024.41(c)(2)(i)–(iii)

With two exceptions, a servicer may not offer a loss

mitigation option based on an evaluation of an

incomplete application.

1. Reasonable Time Exception. If the servicer has

exercised reasonable diligence in obtaining

documents and information to complete the

application but the application still remains

incomplete for a significant period of time

without further progress by the borrower, the

servicer may evaluate an incomplete application

and offer the borrower a loss mitigation option.

What qualifies as a significant period of time may

depend on the timing of the foreclosure process.

For example, 15 days may be a more significant

period of time if the borrower is less than 50 days

before a foreclosure sale than if the borrower is

less than 120 days delinquent. The requirements

in 12 CFR 1024.41 do not apply to this

evaluation, and it is not considered an evaluation

of a complete loss mitigation application for

purposes of determining whether a request for a

loss mitigation evaluation is duplicative under 12

CFR 1024.41(i).

2. Short-Term Forbearance Plan Exception. A short-

term forbearance program allows a borrower to

forgo making certain payments or portions of

payments due over a period of no more than six

months. A servicer may offer such a short-term

payment forbearance program to a borrower

based upon an evaluation of an incomplete loss

mitigation application. If the borrower is perform-

ing pursuant to such a forbearance program, a

servicer may not make the first notice or filing

required by applicable law for any judicial or

non-judicial foreclosure process, and it may not

move for foreclosure judgment or an order of

sale or conduct a foreclosure sale. The servicer

must also comply with the remaining loss

mitigation procedures requirement in 12 CFR

1024.41 regarding incomplete applications, such

as exercising reasonable diligence in obtaining

documents and information to complete the

application.

Additionally, if the borrower com-

pletes the loss mitigation application, the ser-

vicer must comply with all of the loss mitigation

procedure requirements in 12 CFR 1024.41.

The commentary explains that a servicer may

offer loss mitigation options to borrowers who have

not submitted a loss mitigation application. Further,

a servicer may offer loss mitigation options to

borrowers who have submitted incomplete loss

mitigation applications, so long as that offer is not

based upon an evaluation of information contained

in the incomplete application.

Facially Complete Applications—12 CFR

1024.41(c)(2)(iv)

A loss mitigation application is facially complete if

either (i) the servicer’s initial notice under 12 CFR

1024.41(b) advised the borrower that the applica-

tion was complete, or (ii) the servicer’s initial notice

under 12 CFR 1024.41(b) requested additional

information from the borrower to complete the

application and the borrower submitted such

additional information.

If the servicer later discovers that additional

information or corrections to a previously submitted

document are required to complete the facially

25. For an explanation of “reasonable diligence,” see the

above discussion in connection with the receipt of loss mitigation

applications under 12 CFR 1024.41(b).

Real Estate Settlement Procedures Act

28 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

complete application, the servicer must promptly

request the missing information or corrected docu-

ments and treat the application as complete for

purposes of 12 CFR 1024.41(f)(2) and (g) until the

borrower is given a reasonable opportunity to

complete the application. A reasonable opportunity

depends on the particular facts and circum-

stances, but must provide the borrower sufficient

time to gather the necessary information and

documents.

If the borrower completes the application within

this period, the application is considered complete

as of the date it was actually complete for purposes

of 12 CFR 1024.41(c), and the application is

considered complete as of the date it was facially

complete for purposes of 12 CFR 1024.41(d), (e),

(f)(2), (g), and (h).

If the borrower does not complete the application

within this period, the application is considered

incomplete.

Denial of any Loss Mitigation Option—

12 CFR 1024.41(d)

If the servicer denies a loss mitigation application

for any trial or permanent loan modification option,

the notice provided to the borrower must also state

the servicer’s specific reason or reasons for

denying each trial or permanent loan modification

option, and, if applicable, that the borrower was not

evaluated on other criteria. Certain disclosures are

required when a servicer denies an application for

the following reasons or using the following proce-

dures:

• Investor criteria and use of a waterfall.

— If the servicer denies a loan modification

option based upon investor criteria, the ser-

vicer must identify the owner or assignee of

the mortgage loan and the specific criteria

that the borrower failed to satisfy.

— When an owner or assignee has established

an evaluation criteria that sets an order

ranking for evaluation of loan modification

options (commonly known as a “waterfall”)

and a borrower has qualified for a particular

loan modification option in the waterfall, it is

sufficient for the servicer to inform the bor-

rower, with respect to other loan modification

options ranked below any such option offered

to a borrower, that the investor’s requirements

include the use of such a waterfall, and that an

offer of a loan modification option necessarily

results in a denial for any other loan modifica-

tion options below the option for which the

borrower is eligible in the ranking.

• Net present value calculation. If the denial was

based upon a net present value calculation, the

servicer must disclose the inputs used in the

calculation.

• Reasons listed. The following applies if the

servicer uses a hierarchy of eligibility criteria and,

after reaching the first criterion that causes a

denial, does not evaluate whether the borrower

would have satisfied the remaining criteria. In this

instance, the servicer need only (i) provide the

specific reason or reasons why the borrower was

actually rejected and (ii) notify the borrower that

the borrower was not evaluated on other criteria.

A servicer is not required to determine or

disclose whether a borrower would have been

denied based on other criteria if the servicer did

not actually evaluate these additional criteria.

Borrower Response—12 CFR 1024.41(e)

A servicer offering a loss mitigation option must

provide the borrower with a minimum period of time

to accept or reject the option, depending on when

the servicer receives a complete application. If the

application was complete 90 days or more before a

foreclosure sale, the servicer must give the bor-

rower at least 14 days to decide. If it was complete

fewer than 90 but more than 37 days before a

foreclosure sale, the servicer must give the bor-

rower at least seven days to decide.

A borrower’s failure to respond on time can be

treated as a rejection of the loss mitigation options,

with two exceptions. First, a borrower who is

offered a trial loan modification plan and submits

payments that would have been owed under that

plan before the deadline for accepting must be

given a reasonable time to fulfill any remaining

requirements of the servicer for acceptance of the

trial loan modification plan. Second, a servicer

must give a borrower who has a pending appeal

until 14 days after the servicer provides notice of its

determination regarding resolution of that appeal to

decide whether to accept any offered loss mitiga-

tion option.

Prohibition on Foreclosure Referral—12 CFR

1024.41(f)

A servicer cannot make the first foreclosure notice

or filing for any judicial or non-judicial process until

(i) the borrower is more than 120 days delinquent,

(ii) the foreclosure is based on a borrower’s

violation of a due-on-sale clause, or (iii) the servicer

is joining a subordinate lienholder’s foreclosure

action. The commentary states that whether a

document qualifies as the first notice or filing

depends on the foreclosure process at issue:

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 29 (11/15)

• Judicial foreclosure. Where foreclosure proce-

dure requires a court action or proceeding, the

first notice or filing is the earliest document

required to be filed with a court or other judicial

body to commence the action or proceeding.

Depending on the particular foreclosure process,

examples of these documents could be a

complaint, petition, order to docket, or notice of

hearing;

• Non-judicial foreclosure—recording or publica-

tion requirement. Where foreclosure procedure

does not require an action or court proceeding

(such as under a power of sale), the first notice or

filing is the earliest document required to be

recorded or published to initiate the foreclosure

process; or

• Non-judicial foreclosure—no recording or publi-

cation requirement. Where foreclosure proce-

dure does not require an action or court proceed-

ing, and also does not require any document to

be recorded or published, the first notice or filing

is the earliest document that establishes, sets, or

schedules a date for the foreclosure sale.

The commentary further states that a document

provided to the borrower but not initially required to

be filed, recorded, or published is not considered

the first notice or filing on the sole basis that the

documents must later be included as an attach-

ment accompanying another document that is

required to be filed, recorded, or published to carry

out a foreclosure.

If a borrower submits a complete loss mitigation

application before the 120th day of delinquency or

before the servicer makes the first foreclosure

notice or filing, then the servicer cannot make the

first foreclosure notice or filing unless one of the

following occurs: (i) the servicer sends a notice to

the borrower stating that the borrower is ineligible

for any loss mitigation option and if an appeal is

available, either the borrower did not timely appeal,

or the appeal has been denied; (ii) the borrower

rejects all the offered loss mitigation options; or (iii)

the borrower fails to perform under a loss mitigation

agreement.

Prohibition on Foreclosure Sale—12 CFR

1024.41(g)

If a borrower submits a complete loss mitigation

application after the servicer has made the first

foreclosure notice or filing but more than 37 days

before a foreclosure sale, the servicer cannot

conduct a foreclosure sale or move for foreclosure

judgment or sale unless one of the following

occurs: (i) the servicer sends a notice to the

borrower stating that the borrower is ineligible for

any loss mitigation option and the appeal process

is inapplicable, the borrower did not timely appeal,

or the appeal has been denied; (ii) the borrower

rejects all the offered loss mitigation options; or (iii)

the borrower fails to perform under a loss mitigation

agreement.

Appeal Process—12 CFR 1024.41(h)

A borrower has the right to appeal a servicer’s

denial of a loss mitigation application for any trial or

permanent loan modification available to the bor-

rower if the borrower submitted a complete appli-

cation 90 days or more before a foreclosure sale (or

during the pre-foreclosure period set forth in 12

CFR 1024.41(f)). The borrower must commence the

appeal within 14 days after the servicer provides

the notice stating the servicer’s determination of

which loss mitigation options, if any, it will offer to

the borrower.

Within 30 days of the borrower making the

appeal, the servicer must provide a notice to the

borrower stating: (i) whether it will offer the

borrower a loss mitigation option based on the

appeal, and (ii) if applicable, how long the borrower

has to accept or reject this loss mitigation option or

a previously offered loss mitigation option. If the

servicer offers a loss mitigation option after an

appeal, the servicer must provide the borrower at

least 14 days to decide whether to accept the

offered loss mitigation option.

The servicer’s personnel who evaluated the

borrower’s application cannot also evaluate the

appeal, although personnel who supervised the

initial evaluation may evaluate the appeal so long

as they were not directly involved in the initial

evaluation.

Duplicative Requests—12 CFR 1024.41(i)

A servicer is required to comply with these loss

mitigation procedures for only a single complete

loss mitigation application for a borrower’s mort-

gage loan account.

Small Servicer Requirements—12 CFR

1024.41(j)

A small servicer cannot make the first foreclosure

notice or filing required by any judicial or non-

judicial foreclosure process until (i) the borrower is

more than 120 days delinquent, (ii) the foreclosure

is based on a borrower’s violation of a due-on-sale

clause, or (iii) the servicer is joining a subordinate

lienholder’s foreclosure action. If the borrower is

performing according to the terms of a loss

mitigation agreement, a small servicer also cannot

make the first foreclosure notice or filing, move for

a foreclosure judgment or order of sale, or conduct

a foreclosure sale.

Real Estate Settlement Procedures Act

30 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

REFERENCES

Laws

12 U.S.C. 2601 et seq. Real Estate Settlement

Procedures Act

Regulations

Consumer Financial Protection Bureau Regulation

(12 CFR)

Part 1024 Real Estate Settlement Procedures Act

(Regulation X)

Resources

TILA-RESPA Integrated Disclosure Rule – Compli-

ance Guide (http://files.consumerfinance.gov/f/

201409_cfpb_tila-respa-integrated-disclosure-rule

_compliance-guide.pdf)

TILA-RESPA Integrated Disclosure Rule – Guide to

Forms (http://files.consumerfinance.gov/f/201409

_cfpb_tila-respa-integrated-disclosure-guide-to-

form.pdf)

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 31 (11/15)

Regulation X

Real Estate Settlement Procedures Act

Examination Objectives

• To determine if the financial institution has

established policies and procedures to ensure

compliance with the Real Estate Settlement

Procedures Act (RESPA) and Regulation X.

• To determine whether the financial institution

engages in any practices prohibited by RESPA or

Regulation X, such as kickbacks, payment or

receipt of referral fees or unearned fees, or

excessive escrow assessments.

• To determine if the Special Information Booklet,

Good Faith Estimate, Uniform Settlement State-

ment (Form HUD-1 or HUD 1A), mortgage

servicing transfer disclosures, and other required

disclosures are in a form that complies with

Regulation X, are properly completed, and pro-

vided to borrowers, as applicable, within pre-

scribed time periods.

• To determine if the institution is submitting the

required initial and annual escrow account state-

ments to borrowers as applicable, properly

administrating escrow accounts, and otherwise

complying with requirements and limitations on

escrow account arrangements.

• To determine whether the institution is respond-

ing to borrower error notices relating to the

servicing of their mortgage loans in compliance

with the provisions of Regulation X.

• To determine whether the institution is respond-

ing to borrower inquiries for information relating

to the servicing of their mortgage loans in

compliance with the provisions of Regulation X.

• To determine whether the institution is providing

proper notices to borrowers of mortgage loans

before assessing charges or fees for force-

placed insurance and refunding charges and

fees in appropriate cases as RESPA and Regu-

lation X require.

• To determine whether the institution complies

with Regulation X’s record management require-

ments.

• To determine whether the institution is following

Regulation X’s early intervention and continuity of

contact requirements, as applicable.

• To determine whether the institution is complying

with Regulation X’s loss mitigation procedures,

as applicable.

Examination Procedures

Each examination should be risk-based and may

not require an examiner to address all of the

procedures below. In addition, each supervising

agency may have its own supervisory strategy that

will dictate which examination procedures are

required to be completed.

If the financial institution has loans covered by

RESPA, determine whether the institution’s policies,

practices, and procedures ensure compliance with

RESPA and Regulation X.

General Procedures

1. Review the types of loans covered by

RESPA, applicable exemptions, loan poli-

cies, and operating procedures in connec-

tion with federally related mortgage loans. 12

CFR 1024.5 provides RESPA’s general cov-

erage and applicable exemptions, though

other RESPA and Regulation X provisions

include additional exemptions.

2. Assess whether mortgage personnel are

knowledgeable about the requirements of

RESPA and Regulation X.

3. Determine whether the loan disclosure and

timing requirements of Regulation X (rather

than Regulation Z, 12 CFR 1026.19(e) and

(f)) apply to the loans being reviewed

(generally for closed-end reverse mort-

gages).

4. Review the Special Information Booklet, good

faith estimate (GFE) form, Uniform Settlement

Statement form (HUD-1 or HUD-1A), and

mortgage servicing transfer disclosure forms

for compliance with the requirements of

Regulation X. Review standardized and

model forms and clauses in the appendixes

to the regulation.

5. Review the affiliated business arrangement

disclosure form for compliance with the

requirements of Regulation X. Review stan-

dardized and model forms and clauses in the

appendixes to the regulation.

6. If electronic disclosures are provided, deter-

mine whether the institution has policies and

procedures to provide electronic delivery in

accordance with the Electronic Signatures in

Global and National Commerce Act (E-Sign).

7. Through reviewing written loan policies and

operating procedures in connection with

26. These reflect FFIEC-developed procedures.

Consumer Compliance Handbook Regulation X—RESPA • 33 (11/15)

federally related mortgage loans that are not

partially exempt under 12 CFR 1024.5(d)

(i.e., reverse mortgages) and by discussing

them with institution personnel, or through

other appropriate methods, determine

whether the financial institution has policies

and procedures that address the following:

• the information that will be collected from

applicants in connection with issuing a

GFE, and what information will be relied on

to issue a GFE

• provision of a revised GFE in the event of

changed circumstances, both in the course

of a new home purchase and in other kinds

of transactions

• to cure a tolerance violation by reimbursing

the borrower the amount by which the

tolerance was exceeded within 30 calen-

dar days from date of settlement

• to cure a technical or inadvertent error on

the HUD-1/1A by providing a revised

settlement statement to the borrower within

30 calendar days of settlement

8. Through interviews with mortgage lending

personnel or other appropriate methods,

determine

• the identity of persons or entities referring

federally related mortgage loan business;

• the nature of services provided by referral

sources, if any;

• settlement service providers used by the

institution; and

• any providers whose services are required

by the institution.

9. Through interviews with mortgage lending

personnel or other appropriate methods,

assess how the institution complies with the

general servicing policies and procedures

required by Regulation X, as applicable,

including

• how and for how long the institution

maintains documentation and information

related to a mortgage loan account and the

institution’s process for aggregating such

information into a servicing file within five

days;

• how the institution determines whether to

engage third-party service providers, in-

cluding the criteria the institution considers

to evaluate potential service providers;

• how the institution monitors the perfor-

mance of third-party service providers;

• how the institution ensures that it receives

all necessary documentation and informa-

tion concerning mortgage loan files that

are transferred to it by another institution;

and

• how the institution ensures that it sends all

necessary documentation and information

concerning mortgage loan files to another

institution when it transfers files to that

institution.

Subpart B—Mortgage Settlement and

Escrow Accounts

Special Information Booklet—12 CFR

1024.6

10. For mortgages that are not subject to the

TILA RESPA Disclosure Rule under 12 CFR

1026.19(e) and (f), other than reverse mort-

gages, determine through appropriate meth-

ods such as discussions with management

and reviewing credit files whether the Spe-

cial Information Booklet, if required, is pro-

vided within three business days after the

financial institution or broker receives a

written application for a loan (12 CFR 1024.6

(a)(1)).

NOTE: The Special Information Booklet

may be required under 12 CFR 1026.19(g)

for closed-end mortgage loans subject to the

TILA-RESPA Integrated Disclosure rule.

Good Faith Estimate—12 CFR 1024.7

11. For closed-end reverse mortgages (see 12

CFR 1024.5(d)), determine whether the finan-

cial institution provides a good faith estimate

of charges for settlement services, if re-

quired, within three business days after

receipt of a written application (12 CFR

1024.7(a)).

12. Review the Good Faith Estimate to determine

if it appears exactly as set forth in appendix

C to part 1024.

13. Review a sample of loan files that include

GFEs to determine the following:

• whether the financial institution followed

GFE application requirements

• whether the institution provided revised

GFEs to applicants when warranted due to

changed circumstances

• if the institution provided a revised GFE to

the applicant due to changed circum-

stances, determine whether the institution

followed regulatory requirements for issu-

ing a revised GFE due to changed circum-

stances

• whether the GFE was completed as re-

Real Estate Settlement Procedures Act

34 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

quired in the regulations and instructions

(12 CFR 1024.7 and appendix C to 12 CFR

part 1024) and whether it included the

following information:

— interest rate expiration date;

— settlement charges expiration date;

— rate lock period;

— number of days before settlement the

interest rate must be locked, if appli-

cable;

— summary of loan information;

— escrow account information;

— estimates for settlement charges; and

— left-hand column on trade-off table

completed for loan in the GFE.

• whether, for no cost loans, all third-party

fees paid by the financial institution are

itemized and listed in the appropriate

blocks on the second page of the GFE

• whether a separate sheet was provided

with the GFE that identifies the settlement

service providers for the services listed on

the GFE

Uniform Settlement Statement Form

(HUD-1 and HUD-1A)—12 CFR 1024.8

14. Using the same sample of loan files as used

for the review of the GFE (i.e., for reverse

mortgages), review the Uniform Settlement

Statement (HUD-1 or HUD-1A, as appropri-

ate) (12 CFR 1024.8 and appendix A to 12

CFR Part 1024) to determine whether

• charges are properly itemized in accor-

dance with the instructions for completion

of the HUD-1 or HUD-1A (appendix A to 12

CFR Part 1024);

• all charges paid by the borrower and the

seller are itemized and include the name of

the recipient (12 CFR 1024.8(b), appendix

A);

• Average charges for settlement services

are calculated in accordance with 12 CFR

1024.8(b)(2); and

• charges required by the financial institution

but paid outside of closing are itemized on

the settlement statement, marked as “paid

outside of closing” or “P.O.C.,” but not

included in cost totals (12 CFR 1024.8(b);

appendix A).

15. If the financial institution conducts the settle-

ment, determine whether

• the borrower, upon request, is allowed to

inspect the HUD-1 or HUD-1A at least one

business day prior to settlement (12 CFR

1024.10(a));

• the HUD-1 or HUD-1A is provided to the

borrower and seller at or before settlement

(except where the borrower has waived the

right to delivery and in the case of exempt

transactions) (12 CFR 1024.10(b)); or

• in cases where the right to delivery is

waived or the transaction is exempt, the

HUD-1/1A is mailed as soon as practicable

after settlement (12 CFR 1024.10(b), (c),

and (d)).

16. Determine whether, in the case of an inad-

vertent or technical error on the HUD-1/1A,

the financial institution provides a revised

HUD-1/1A to the borrower within 30 calendar

days after settlement (12 CFR 1024.8(c)).

17. Review the HUD-1 or HUD-1A form prepared

in connection with each GFE reviewed to

determine if the amount stated for any

itemized service exceeds the amount shown

on the GFE for that service. If the amount

stated on the HUD-1 exceeds the amount

shown on the GFE and such overcharge

violates the tolerance for that category of

settlement services, determine whether the

financial institution cured the tolerance viola-

tion by reimbursing to the borrower the

amount by which the tolerance was ex-

ceeded, at settlement or within 30 calendar

days from date of settlement (12 CFR

1024.7(i)).

18. Determine whether HUD-1 and HUD-1A

forms are retained for five years after settle-

ment if the institution retains its interest in the

mortgage and/or services. If the financial

institution disposes of its interest in the

mortgage and does not service the loan,

determine whether the HUD-1 or HUD-1A

form is transferred to the new asset owner

with the loan file (12 CFR 1024.10(e)).

Homeownership Counseling

Organization List—12 CFR 1024.20

19. Determine whether the lender (or a mortgage

broker or dealer) provided a clear and

conspicuous written list of homeownership

counseling services in the applicant’s loca-

tion no later than three business days after

the lender, mortgage broker, or dealer re-

ceived the application or information suffi-

cient to complete an application (for RESPA-

covered loans except for reverse mortgages

or timeshare loans) (12 CFR 1024.20(a) and

(c)). The written list does not need to be

provided if, within the three-business-day

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 35 (11/15)

period, the lender denies the application or

the applicant withdraws it (12 CFR 1024.20

(a)(5)).

20. Determine whether the lender obtained the

list from either the website maintained by the

CFPB or data made available by the CFPB or

HUD for lenders complying with this require-

ment, no earlier than 30 days prior to the time

it was provided to the applicant (12 CFR

1024.20(a)).

No Fees for RESPA Disclosures—

12 CFR 1024.12

21. Determine whether the financial institution

charges a fee specifically for preparing and

distributing the HUD-1 forms, escrow state-

ments or documents required under the

Truth in Lending Act (12 CFR 1024.12).

22. If any fee is charged before providing a GFE

in a reverse mortgage transaction, determine

whether such fee is limited to the cost of a

credit report (12 CFR 1024.7(a)(4)).

Purchase of Title Insurance—12 CFR

1024.16

23. When the financial institution owns the prop-

erty being sold, determine whether it re-

quires that title insurance be purchased from

a particular company (12 CFR 1024.16).

Payment or Receipt of Referral or

Unearned Fees—12 CFR 1024.14

24. Through interviews with institution manage-

ment and reviews of audits, policies, and

procedures or other appropriate methods,

determine if management is aware of the

prohibition against payment and receipt of

any fee, kickback, or thing of value in return

for the referral of settlement services busi-

ness (12 CFR 1024.14).

25. Through interviews with institution manage-

ment and reviews of audits, policies, and

procedures or other appropriate methods,

determine if management is aware of the

prohibition against unearned fees where a

charge for settlement services is divided

between two or more parties.

26. Through interviews with institution manage-

ment and personnel, file reviews, review of:

good faith estimates and HUD-1 or HUD-1A

(for closed-end reverse mortgages), the

TILA-RESPA Integrated Disclosures (for other

closed-end mortgages secured by a dwell-

ing), or other appropriate methods, deter-

mine if federally related mortgage loan

transactions are referred to the institution by

brokers, affiliates, or other parties. Also,

identify persons or entities to which the

institution refers settlement services busi-

ness in connection with a federally related

mortgage transaction.

• Identify the types of services rendered by

the broker, affiliate, or service provider.

• By a review of the institution’s general

ledger or otherwise determine if fees were

paid to the institution or any parties identi-

fied.

• Determine whether any fees paid or re-

ceived by the institution are for goods or

facilities actually furnished or services

actually performed and are not kickbacks

or referral fees (12 CFR 1024.14(b)). This

includes payments by the institution to an

affiliate or the affiliate’s employees in

connection with real estate settlements.

• In cases where a fee is split between the

institution and one or more other parties,

determine whether each party actually

performed services for that fee (12 CFR

1024.14(c)). This includes payments by

the institution to an affiliate or the affiliate’s

employees in connection with real estate

settlements.

Affiliated Business Arrangements—

12 CFR 1024.15

27. Determine from the TILA-RESPA Integrated

Disclosures (or the HUD-1 or HUD-1A for

reverse mortgages) and from interviews with

institution management, or through other

appropriate methods, if the institution re-

ferred a borrower to a settlement service

provider with which the institution was affili-

ated or in which the institution had a direct or

beneficial ownership interest of more than 1

percent (hereinafter, an “affiliated business

arrangement”).

28. If the financial institution had an affiliated

business arrangement, determine whether

the affiliated business arrangement disclo-

sure statement (appendix D to part 1024)

was provided as required by 12 CFR 1024.15

(b)(1).

29. Other than an attorney, credit reporting

agency, or appraiser representing the lender,

if the financial institution referred a borrower

to a settlement service provider, determine

whether the institution required the use of the

provider (12 CFR 1024.15(b)(2)).

30. Determine if compensation received by the

lender in connection with an affiliated busi-

ness arrangement is limited to a return on an

Real Estate Settlement Procedures Act

36 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

ownership interest or other amounts permis-

sible under RESPA (12 CFR 1024.15(b)(3)).

Escrow Accounts—12 CFR 1024.17

If the institution maintains escrow accounts in

connection with a federally related mortgage loan,

complete the following procedures.

31. Determine whether the institution performed

an initial escrow analysis (12 CFR 1024.17(c)

(2)) and provided the initial escrow statement

required by 12 CFR 1024.17(g). The state-

ment must contain the following:

• amount of monthly payment;

• portion of the monthly payment being

placed in escrow;

• charges to be paid from the escrow

account during the first 12 months;

• disbursement dates; and

• amount of cushion.

32. Determine if the statement was given to the

borrower at settlement or within 45 days after

the escrow account was established. This

statement may be incorporated into the

HUD-1 statement (12 CFR 1024.17(g)(1) and

(2)).

33. Determine whether the institution performs

an annual analysis of the escrow account (12

CFR 1024.17(c)(3) and (7), and 1024.17(i)).

34. Determine whether the annual escrow ac-

count statement is provided to the borrower

within 30 days of the end of the computation

year (12 CFR 1024.17(i)).

35. Determine if the annual escrow statement

contains the following:

• amount of monthly mortgage payment and

portion placed in escrow;

• amount of past year’s monthly mortgage

payment and portion that went into escrow;

• total amount paid into escrow during the

past computation year;

• total amount paid out of escrow account

during same period for taxes, insurance,

and other charges;

• balance in the escrow account at the end

of the period;

• how a surplus, shortage, or deficiency is to

be paid/handled; and

• if applicable, the reason why the estimated

low monthly balance was not reached (12

CFR 1024.17(i)(1)).

36. Determine whether monthly escrow pay-

ments following settlement are within the

limits of 12 CFR 1024.17(c).

Force-Placed Insurance

12 CFR 1024.17(k)(5) includes requirements with

respect to borrowers who had established an

escrow account for the payment of hazard insur-

ance. The provision contains a limited exception for

small servicers. 12 CFR 1026.41(e)(4)(ii) provides

that an institution qualifies as a small servicer if it

either (a) services, together with any affiliates,

5,000 or fewer mortgage loans, as that term is used

in 12 CFR 1026.41(a)(1), for all of which the

institution (or an affiliate) is the creditor or assignee;

(b) is a Housing Finance Agency, as defined in 24

CFR 266.5 (§1026.41(e)(4)(ii)); or (c) is a nonprofit

entity (defined in §1026.41(e)(4)(ii)(C)(1)) that ser-

vices 5,000 or fewer mortgage loans, including any

mortgage loans serviced on behalf of associated

nonprofit entities (defined in §1026.41(e)(4)(ii)(C)

(2)), for all of which the servicer or an associated

nonprofit entity is the creditor.

To determine whether a servicer is a small

servicer, generally, a servicer should be evaluated

based on the mortgage loans serviced by the

servicer and any affiliate as of January 1 for the

remainder of the calendar year. However, to

determine small-servicer status under the nonprofit

small-servicer definition, a nonprofit servicer should

be evaluated based on the mortgage loans ser-

viced by the servicer (and not those serviced by

associated nonprofit entities) as of January 1 for the

remainder of the calendar year. A servicer that

ceases to qualify as a small servicer has the later of

six months from the time it ceases to qualify or until

the next January 1 to come into compliance with

the requirements of 12 CFR 1026.41.

The following mortgage loans are not considered

in determining whether a servicer qualifies as a

small servicer: (a) mortgage loans voluntarily

serviced by the servicer for a creditor or assignee

that is not an affiliate of the servicer and for which

the servicer does not receive any compensation or

fees, (b) reverse mortgage transactions, and (c)

mortgage loans secured by consumers’ interests in

timeshare plans (12 CFR 1026.41(e)(4)(iii)).

The procedures related to 12 CFR 1024.38

discuss the definition of smaller servicer in greater

detail. In addition, the procedures related to 12

CFR 1024.34 and 1024.37 may be applicable to

escrow accounts and fees or charges for force-

placed insurance.

37. If the institution purchased force-placed

insurance for a borrower who had estab-

lished an escrow account for the payment of

hazard insurance, determine whether the

institution was permitted to do so under 12

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 37 (11/15)

CFR 1024.17(k)(5). Under that provision, an

institution may not purchase force-placed

insurance unless (i) the borrower was more

than 30 days delinquent and (ii) the institu-

tion was unable to disburse funds from the

escrow account to ensure that the borrower’s

hazard insurance premium charges were

paid in a timely manner.

An institution is unable to disburse funds if

it has a reasonable basis to believe that

either (a) the borrower’s property is vacant or

(b) the borrower’s hazard insurance has

terminated for reasons other than nonpay-

ment of the premium charges. An institution

is not unable to disburse funds from the

borrower’s escrow account solely because

the account has insufficient funds for paying

hazard insurance premium charges (12 CFR

1024.17(k)(5)(ii)).

38. Small servicer exception. Notwithstanding

the above, a small servicer may charge

borrowers for force-placed insurance. If the

institution is a small servicer and charged

borrowers for force-placed insurance, deter-

mine whether the cost to each borrower of

the force-placed insurance was less than the

amount the institution would have needed to

disburse from the borrower’s escrow ac-

count to ensure that hazard insurance

charges were paid in a timely manner (12

CFR 1024.17(k)(5)(iii)).

Subpart C—Mortgage Servicing

Applicability: Except as otherwise noted below, the

provisions of Subpart C—Mortgage Servicing, 12

CFR 1024.30-41, apply to any mortgage loan, as

that term is defined in 12 CFR 1024.31.

Mortgage Servicing Transfer

Disclosures—12 CFR 1024.33

Reverse Mortgage Disclosure Statement

Complete the following if the institution received an

application for a reverse mortgage loan, as defined

in 12 CFR 1024.31.

39. Determine whether the lender, mortgage

broker who anticipates using table funding,

or dealer in a first-lien dealer loan provided a

proper servicing disclosure statement to the

borrower within three days (excluding legal

public holidays, Saturdays, and Sundays)

after receipt of the application. The disclo-

sure statement must advise whether the

servicing of the mortgage loan may be

assigned, sold, or transferred to any other

person at any time. A model disclosure

statement is set forth in appendix MS-1 (12

CFR 1024.33(a)).

Additionally, the disclosure statement is

not required if the institution denied the

application within the three-day period.

Transfers of Mortgage Servicing

Rights—Disclosures

Complete the following if the institution has trans-

ferred or received mortgage servicing rights. The

following are generally not considered transfers: (1)

transfers between affiliates; (2) transfers resulting

from mergers or acquisitions of servicers or

subservicers; and (3) transfers between master

servicers, when the subservicer remains the same.

Additionally, the Federal Housing Administration

(FHA) is not required to provide a notice of transfer

to the borrower where a mortgage insured under

the National Housing Act is assigned to the FHA

(12 CFR 1024.33(b)).

40. If the institution has transferred mortgage

servicing rights, determine whether notice to

the borrower was given at least 15 days prior

to the transfer (12 CFR 1024.33(b)(3)). This

notice may be combined with the transfer-

ee’s notice (discussed below) into one notice

if delivered to the borrower at least 15 days

before the effective date of the transfer.

Notices provided at the time of settlement

satisfy the timing requirements.

41. If the institution has received mortgage

servicing rights, determine whether notice

was given to the borrower within 15 days

after the transfer (12 CFR 1024.33(b)(3)).

This notice may be combined with the

transferor’s notice (discussed above) into

one notice if delivered to the borrower at

least 15 days before the effective date of the

transfer. Notices provided at the time of

settlement satisfy the timing requirements.

42. Determine whether the notice sent by the

institution includes the following information

(12 CFR 1024.33(b)(4)). Sample language

for the notice of transfer is contained in

appendix MS-2 to 12 CFR part 1024.

• the effective date of the transfer;

• the name, address, and toll-free or collect-

call telephone number for an employee or

department of the transferee servicer that

can be contacted by the borrower to obtain

answers to servicing transfer inquiries;

• the name, address, and toll-free or collect-

call telephone number for an employee or

department of the transferor servicer that

can be contacted by the borrower to obtain

answers to servicing transfer inquiries;

• the date on which the transferor servicer

will cease accepting payments relating to

Real Estate Settlement Procedures Act

38 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

the loan and the date on which the

transferee servicer will begin to accept

such payments. The dates must either be

the same or consecutive dates;

• whether the transfer will affect the terms or

the availability of optional insurance and

any action the borrower must take to

maintain such coverage; and

• a statement that the transfer does not

affect the terms or conditions of the

mortgage (except as directly related to

servicing) (appendix MS-2 to 12 CFR part

1024).

43. Determine whether the notice by the transf-

eror and transferee was sent to the borrow-

er’s address listed in the mortgage loan

documents, unless the borrower notified the

institution of a new address pursuant to the

institution’s requirements (12 CFR part 1024,

supp. I., comment 1024.33(b)(3)-1).

Transfers of Mortgage Servicing

Rights—Treatment of Post-Transfer

Payments

Complete the following if the institution has trans-

ferred or received mortgage servicing rights.

44. If the borrower sent any payments to the

transferor servicer within the 60 days follow-

ing a transfer of servicing rights, determine

whether the institution imposed late fees or

otherwise treated such payments as late (12

CFR 1024.33(c)(1)).

45. If the borrower sent any payments to the

transferor servicer within the 60 days follow-

ing a transfer of servicing rights, determine

whether the transferor servicer either (a)

forwarded the payment to the transferee

servicer or (b) returned the payment and

informed the payor of the proper recipient of

the payment (12 CFR 1024.33(c)(2)).

Timely Escrow Payments and Treatment

of Escrow Account Balances—12 CFR

1024.34

Complete the following if the terms of a borrower’s

mortgage loan, as defined in 12 CFR 1024.31,

require the borrower to make payments to the

institution for deposit into an escrow account to pay

taxes, insurance premiums, and other charges for

the mortgaged property.

46. Determine whether the institution made pay-

ments from the escrow account in a timely

manner (12 CFR 1024.34). A “timely manner”

means on or before the deadline to avoid a

penalty, as governed by the requirements in

12 CFR 1024.17(k).

47. Determine whether the institution returned

amounts remaining in escrow within 20 days

(excluding legal public holidays, Saturdays,

and Sundays) after the borrower paid the

mortgage loan in full (12 CFR 1024.34(b)).

The institution does not need to return this

amount if it and the borrower agree to credit

the remaining funds towards an escrow

account for certain new mortgage loans.

Error Resolution Procedures—12 CFR

1024.35

Complete the following based upon a review of a

sample of mortgage loan (as defined in 12 CFR

1024.31) files that included error notices from

borrowers or through other appropriate methods.

Address for Error Notices

48. If the institution designates an address or

addresses to which borrowers must send

error notices, complete the following:

• Determine whether the institution provided

written notice of the address to the bor-

rower, along with a statement that the

borrower must use that address to assert

errors (12 CFR 1024.35(c)).

• Determine whether the institution also pro-

vided that address to the borrower in each

of the following three types of communica-

tions:

— any periodic statement or coupon book

required under 12 CFR 1026.41;

— any website the institution maintains in

connection with the servicing of the

loan; and

— any notice required pursuant to 12 CFR

1024.39 (early intervention) or .41 (loss

mitigation) that includes contact infor-

mation for assistance (12 CFR part

1024, supp. I., comment 1024.35(c)-2).

• Determine whether the institution desig-

nated the same address for receiving

information requests pursuant to 12 CFR

1024.36(b) (12 CFR 1024.35(c)).

• If the institution establishes an electronic

method for submitting error notices that is

its exclusive online intake process, deter-

mine whether this electronic process was

in addition to, and not in lieu of, any

process for receiving error notices by mail

(12 CFR part 1024, supp. I., comment

1024.35(c)-4).

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 39 (11/15)

49. If the institution does not establish a specific

address to which to send error notices,

determine whether the institution responds to

error notices sent to any of its offices (12 CFR

part 1024, supp. I., comment 1024.35(c)-1).

Acknowledgement of Error Notices

50. Determine whether

• the institution properly acknowledged the

error notice by providing written acknowl-

edgement of the error notice to the bor-

rower within five days (excluding legal

public holidays, Saturdays, and Sundays)

after receiving an error notice (12 CFR

1024.35(d)); or

• acknowledgment was not required be-

cause

— the institution corrected the errors as-

serted and notified the borrower in

writing within five days (excluding legal

public holidays, Saturdays, and Sun-

days) of receiving the error notice (12

CFR 1024.35(f));

— the institution determined that it was not

required to respond and provided writ-

ten notice, with the basis for its decision

not to take any action, to the borrower

within five days (excluding legal public

holidays, Saturdays, and Sundays) af-

ter making that determination (12 CFR

1024.35(g)); or

— the error notice related to violations of

certain loss mitigation procedures un-

der 12 CFR 1024.35(b)(9) or (10) and

was received by the institution seven or

fewer days before a foreclosure sale.

With respect to such error notices, the

institution must make a good faith

attempt to respond orally or in writing to

the borrower and either correct the

error or state the reason the institution

determined that no error occurred (12

CFR 1024.35(f)(2)).

Response to Error Notices

51. Determine whether

• the institution properly responded to a

borrower’s written error notice by

— correcting the errors identified by the

borrower as well as any different or

additional errors that were discovered

during the investigation and providing

written notice to the borrower of the

corrections, the date the corrections

took effect, and contact information for

further assistance; or

— conducting a reasonable investigation

and providing the borrower with a

written notice stating that the institution

has determined that no error occurred,

the reasons for its determination, the

borrower’s right to request documents

relied upon by the institution in reaching

its determination and how to do so, and

contact information for further assis-

tance (12 CFR 1024.35(e)); AND

— undertaking one of the above within the

following time frames:

– if the alleged error was a failure to

provide an accurate payoff balance

amount, the institution responded

within seven days (excluding legal

public holidays, Saturdays, and Sun-

days) (12 CFR 1024.35(e)(3)(A));

– if the alleged error was either (1)

making the first notice or filing for a

judicial or non-judicial foreclosure

process in violation of 12 CFR

1024.41(f) or (j), or (2) moving for

foreclosure judgment or order of sale

or conducting a foreclosure sale in

violation of 12 CFR 1024.41(g) or (j),

the institution responded by the ear-

lier of 30 days (excluding legal public

holidays, Saturdays, and Sundays) or

the date of a foreclosure sale (12 CFR

1024.35(e)(3)(B)). However, if the

institution received the error notice

seven or fewer days before a foreclo-

sure sale, the institution is not re-

quired to respond in writing but must

nevertheless make a good faith at-

tempt to respond orally or in writing to

the borrower and either correct the

error or state the reason the institution

determined that no error occurred

(12 CFR 1024.35(f)(2));

– for all other alleged errors, the insti-

tution responded within 30 days (ex-

cluding legal public holidays, Satur-

days, and Sundays) unless, prior to

the expiration of that 30-day period,

the institution extended the time for

responding by an additional 15 days

(excluding legal public holidays, Sat-

urdays, and Sundays) by notifying

the borrower in writing of the exten-

sion and the reasons for it (12 CFR

1024.35(e)(3)); OR

• the above responses were not required

because

Real Estate Settlement Procedures Act

40 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

— the institution corrected the errors as-

serted and notified the borrower in

writing within five days (excluding legal

public holidays, Saturdays, and Sun-

days) of receiving the error notice (12

CFR 1024.35(f));

— the institution determined that it was not

required to respond and provided writ-

ten notice, with the basis for its decision

not to take any action, to the borrower

within five days (excluding legal public

holidays, Saturdays, and Sundays) af-

ter making that determination (12 CFR

1024.35(g)); or

— the error notice related to violations of

certain loss mitigation procedures un-

der 12 CFR 1024.35(b)(9) or (10) and

was received by the institution seven or

fewer days before a foreclosure sale.

With respect to such error notices, the

institution must make a good faith

attempt to respond orally or in writing to

the borrower and either correct the

error or state the reason the institution

determined that no error occurred (12

CFR 1024.35(f)(2)).

Determination that No Error Occurred

52. If the institution stated that no error occurred

and the borrower requested supporting docu-

mentation, determine whether the institution

provided the documents that it relied upon to

determine that no error occurred within 15

days (excluding legal public holidays, Satur-

days, and Sundays) (12 CFR 1024.35(e)(4)).

If the institution withheld documents that

constituted confidential, proprietary, or privi-

leged information, determine whether it pro-

vided written notification to the borrower

within 15 days (excluding legal public holi-

days, Saturdays, and Sundays) (12 CFR

1024.35(e)(4)).

Determination that No Response Was

Required

53. If the institution determined that it was

exempt from the requirement to respond,

determine whether the institution reasonably

determined that one of the following three

exemptions applied:

• the error asserted is substantially the same

as an error previously asserted by the

borrower for which the institution complied

with 12 CFR 1024.35(d) and (e), unless the

borrower provides new and material infor-

mation to support the error;

• the error notice was overbroad. An error

notice is overbroad if the institution cannot

reasonably determine from the error notice

the specific error that has occurred on a

borrower’s account; or

• the error notice was untimely. An error

notice is untimely if it is delivered to the

institution more than one year after either (i)

the institution transferred servicing respon-

sibility to another institution, or (ii) the

mortgage loan was discharged (12 CFR

1024.35(g)(1)). A mortgage loan is dis-

charged when both the debt and all

corresponding liens have been extin-

guished or released, as applicable.

Asserted Errors Related to Non-bona Fide

Fees

54. If the borrower asserted that the institution

charged a fee without a reasonable basis to

do so, determine whether the institution in

fact had a reasonable basis to impose the

fee (12 CFR 1024.35(b)(5)). An institution

lacks a reasonable basis to impose fees that

are not bona fide, such as (i) a late fee for a

payment that was not late, (ii) a charge for a

service that a service provider did not

actually provide, (iii) a default management

fee for borrowers who are not delinquent, or

(iv) a charge for force-placed insurance that

is not permitted by 12 CFR 1024.37 (12 CFR

Part 1024, supp. I., comment 1024.35(b)-2).

Impermissible Fees and Conditions and

other Restrictions

55. Determine whether the institution condi-

tioned its investigation of the asserted error

on the borrower providing supporting docu-

mentation (12 CFR 1024.35(e)(2)(i)).

56. Determine whether the institution determined

that no error occurred because the borrower

failed to provide any requested information

without conducting a reasonable investiga-

tion (12 CFR 1024.35(e)(2)(ii)).

57. Determine whether the institution charged a

fee or required the borrower to make any

payments as a condition to responding to an

error notice (12 CFR 1024.35(h)).

58. Determine whether the institution furnished

adverse information to any consumer report-

ing agency regarding a payment that was

the subject of an error notice within 60 days

after receiving the notice (12 CFR 1024.35

(i)).

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 41 (11/15)

Requests for Information—12 CFR

1024.36

Complete the following based upon a review of a

sample of mortgage loan (as defined in 12 CFR

1024.31) files that included information requests

from borrowers or other appropriate methods.

Address for Information Requests

59. If the institution designates an address or

addresses to which borrowers must send

information requests, complete the following:

• Determine whether the institution provided

written notice of the address to the bor-

rower, along with a statement that the

borrower must use that address to request

information (12 CFR 1024.36(b)).

• Determine whether the institution also pro-

vided that address to the borrower in each

of the following three communications:

— any periodic statement or coupon book

required under 12 CFR 1026.41;

— any website the institution maintains in

connection with the servicing of the

loan; and

— any notice required pursuant to 12 CFR

1024.39 (early intervention) or .41 (loss

mitigation) that includes contact infor-

mation for assistance (12 CFR part

1024, supp. I., comment 1024.36(c)-2).

• Determine whether the institution desig-

nated the same address for receiving

information requests pursuant to 12 CFR

1024.35(c) (12 CFR 1024.36(b)).

• If the institution establishes an electronic

method for submitting information requests

that is its exclusive online intake process,

determine whether this electronic process

was in addition to, and not in lieu of, any

process for receiving information requests

by mail (12 CFR Part 1024, supp. I.,

comment 1024.36(c)-4).

60. If the institution does not establish a specific

address to which to send information re-

quests, determine whether the institution

responds to information requests sent to any

of its offices (12 CFR part 1024, supp. I.,

comment 1024.36(b)-1).

Acknowledgement of Information Requests

61. Determine whether

• the institution properly acknowledged the

information request by providing written

acknowledgement to the borrower within

five days (excluding legal public holidays,

Saturdays, and Sundays) after receiving

the information request (12 CFR 1024.36

(c)); or

• acknowledgement was not required be-

cause

— the institution provided the borrower

with the information requested and

contact information (including tele-

phone number) for further assistance

within five days (excluding legal public

holidays, Saturdays, and Sundays) (12

CFR 1024.36(e)); or

— the institution determined that it was not

required to respond and provided writ-

ten notice with the basis for its determi-

nation not to respond to the request to

the borrower within five days (excluding

legal public holidays, Saturdays, and

Sundays) after making that determina-

tion (12 CFR 1024.36(f)).

Response to Information Requests

62. Determine whether

• the institution properly responded to the

information request by

— providing the requested information

and contact information for further as-

sistance (12 CFR 1024.36(d)(1)(i)); or

— conducting a reasonable search for the

requested information and providing

the borrower with a written notice advis-

ing the borrower that the institution has

determined that the requested informa-

tion is not available to it, the basis for

the institution’s determination, and con-

tact information for further assistance

(12 CFR 1024.36(d)(1)(ii)). Information

is not available to the institution if the

information is not in the institution’s

control or possession or if it cannot be

retrieved in the ordinary course of

business through reasonable efforts

such as, for example, if electronic

back-up media is not normally acces-

sible to the institution’s personnel and

would take an extraordinary effort to

identify and restore. Information stored

offsite but which personnel can access

upon request is available to the institu-

tion; AND

— undertaking one of the above within the

following time frames:

– if the borrower requested the identity

of or contact information for the

Real Estate Settlement Procedures Act

42 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

owner or assignee of a mortgage

loan, responding within 10 days (ex-

cluding legal public holidays, Satur-

days, and Sundays);

– for all other information requests,

responding within 30 days (excluding

legal public holidays, Saturdays, and

Sundays) unless, prior to the expira-

tion of that 30-day period, the institu-

tion extended the time for responding

by an additional 15 days (excluding

legal public holidays, Saturdays, and

Sundays) by notifying the borrower in

writing of the extension and the

reasons for it (12 CFR 1024.36(d));

• the above responses were not required

because

— the institution provided the borrower

with the information requested and

contact information (including tele-

phone number) for further assistance

within five days (excluding legal public

holidays, Saturdays, and Sundays) (12

CFR 1024.36(e)); or

— the institution determined that it was not

required to respond and provided writ-

ten notice with the basis for its determi-

nation not to respond to the request to

the borrower within five days (excluding

legal public holidays, Saturdays, and

Sundays) after making that determina-

tion (12 CFR 1024.36(f)(2)).

Information Requests Regarding the Identity

or Contact Information of the Owner or

Assignee of a Mortgage Loan

63. If the information requested is the identity or

contact information of the owner or assignee

of a mortgage loan, determine whether the

institution complied by identifying the person

on whose behalf the institution receives

payments (12 CFR part 1024, supp. I.,

comment 1024.36(a)-2). For example, if the

owner is a trust, then the institution should

identify the trust as the owner and provide

the trustee’s contact information.

Determination that No Response Was

Required

64. If the institution determined that it was

exempt from the requirement to respond,

determine whether the institution reasonably

determined that one of the following five

exemptions applied:

• the information requested is substantially

the same as information the borrower

previously requested for which the institu-

tion has already complied with the require-

ments for responding to written information

requests (12 CFR 1024.36(f)(1)(i));

• the information requested is confidential,

proprietary, or privileged (12 CFR 1024.36

(f)(1)(ii));

• the information requested is not directly

related to the borrower’s mortgage loan

account (12 CFR 1024.36(f)(1)(iii));

• the information request is overbroad or

unduly burdensome. A request is over-

broad if the borrower requests that the

institution provide an unreasonable volume

of documents or information. A request is

unduly burdensome if a diligent institution

could not respond within the time periods

set forth in 12 CFR 1024.46(d)(2) or would

incur costs (or have to dedicate resources)

that would be unreasonable in light of the

circumstances (12 CFR 1024.36(f)(1)(iv));

• the information request is sent more than

one year after either the mortgage loan

balance was discharged or the institution

transferred the mortgage loan to another

servicer (12 CFR 1024.36(f)(1)(v)). A mort-

gage loan is discharged when both the

debt and all corresponding liens have

been extinguished or released, as appli-

cable.

Determination that Information Request Was

Overbroad

65. If the institution determined that a submitted

request was overbroad or unduly burden-

some, determine whether the institution could

reasonably have identified a valid informa-

tion request in the submission and whether

the institution did so (12 CFR 1024.36(f)(1)

(iv)).

Impermissible Fees and Conditions

66. Determine whether the institution charged a

fee, or required a borrower to make any

payment that was owed on the borrower’s

account, as a condition of responding to an

information request (12 CFR 1024.36(g)).

Force-Placed Insurance—12 CFR

1024.37

Applicability: Servicers must comply with restric-

tions on purchasing, renewing, and assessing fees

for “force-placed insurance,” which is defined as

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 43 (11/15)

hazard insurance that a servicer obtains on behalf

of the owner or assignee to insure the property

securing the mortgage loan (but does not include

(i) flood insurance required by the Flood Disaster

Protection Act of 1973; (ii) hazard insurance

obtained by a borrower but renewed by the

borrower’s servicer in accordance with 12 CFR

1024.17(k)(1), (2), or (5); or (iii) hazard insurance

obtained by a borrower but renewed by the

borrower’s servicer at its discretion with the borrow-

er’s agreement).

The provisions of 12 CFR 1024.37 define when

an institution may assess fees on borrowers related

to force-placed insurance. These provisions apply

to any mortgage loan, as that term is defined in 12

CFR 1024.31.

Assessing Charges or Fees Related to

Force-Placed Insurance

Complete the following if the institution assessed a

charge or fee on a borrower related to force-placed

insurance.

Reasonable Basis

67. Determine whether the institution had a

reasonable basis to believe that the borrower

has failed to comply with the mortgage loan

contract’s requirement to maintain hazard

insurance (12 CFR 1024.37(b)). An institu-

tion’s “reasonable basis” may be based

upon information about a borrower’s hazard

insurance, which the institution receives from

the borrower; the borrower’s insurance pro-

vider; or the borrower’s insurance agent. If

the institution receives no such information,

the institution may satisfy the “reasonable

basis” standard if it acts with reasonable

diligence to ascertain the borrower’s hazard

insurance status and does not receive evi-

dence of hazard insurance. A servicer that

complies with the initial and reminder notice

requirements (below) has acted with reason-

able diligence (12 CFR part 1024, supp. I,

comment 1024.37(b)-1).

Initial Notice

68. Determine whether the institution provided

the initial written notice to the borrower at

least 45 days before assessing a fee or

charge (12 CFR 1024.37(c)).

69. Determine whether the initial notice included

the following information (12 CFR 1024.37

(c)). Sample language for the initial notice is

contained in appendix MS-3(A) to 12 CFR

part 1024.

• the date of the notice;

• the institution’s name and mailing address;

• the borrower’s name and mailing address;

• a statement that requests the borrower

provide hazard insurance information for

the borrower’s property and that identifies

the property by its physical address;

• a statement that the borrower’s hazard

insurance has expired or is expiring (as

applicable), that the institution lacks evi-

dence that the borrower has hazard insur-

ance coverage past the expiration date,

and (if applicable) that identifies the type of

hazard insurance lacking;

• a statement that hazard insurance is re-

quired on the borrower’s property and that

the institution has purchased or will pur-

chase insurance at the borrower’s ex-

pense;

• a request that the borrower promptly

provide the institution with insurance infor-

mation;

• a description of the requested insurance

information, how the borrower may provide

such information, and (if applicable) that

the requested information must be in

writing;

• a statement that the insurance coverage

the institution has purchased or will pur-

chase may cost significantly more than,

and provide less coverage than, hazard

insurance purchased by the borrower;

• the institution’s phone number for borrower

inquiries; and

• a statement advising that the borrower

review additional information provided in

the same transmittal (if applicable).

70. Determine whether the initial notice was in

the correct form. The notice must provide

certain information in bold text and, other

than the specific statements listed above, the

institution cannot provide any information on

the initial notice (though the institution can

provide additional information on separate

pages of paper contained in the same

transmittal) (12 CFR 1024.37(c)(3)-(4)). A

sample notice is contained in appendix

MS-3(A) to 12 CFR part 1024.

Reminder Notice

71. If the institution received no hazard insur-

ance information or did not receive evidence

of continuous coverage, determine whether

the institution provided a reminder notice (i)

at least 30 days after mailing or delivering the

initial notice and (ii) at least 15 days before

assessing any charges or fees for force-

placed insurance (12 CFR 1024.37(d)(1)).

Real Estate Settlement Procedures Act

44 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

72. For borrowers who did not provide hazard

insurance information, determine whether

the reminder notice (i) contains the date of

the reminder notice and all of the other

information provided in the initial notice; (ii)

advises that it is a second and final notice;

and (iii) identifies the annual cost of force-

placed insurance or, if unknown, a reason-

able estimate (12 CFR 1024.37(d)(2)(i)).

Sample language for the reminder notice is

contained in appendix MS-3(B) to 12 CFR

part 1024.

73. When the institution receives hazard insur-

ance information but does not receive evi-

dence of continuous coverage, determine

whether the reminder notice includes the

following information (12 CFR 1024.37(d)(2)

(ii)). Sample language for the reminder

notice is contained in appendix MS-3(C) to

12 CFR part 1024.

• the date of the reminder notice;

• the institution’s name and mailing address;

• the borrower’s name and mailing address;

• a statement requesting that the borrower

provide hazard insurance information for

the borrower’s property and that identifies

the property by its physical address;

• the institution’s phone number for borrower

inquiries;

• a statement advising that the borrower

review additional information provided in

the same transmittal (if applicable);

• a statement that it is the second and final

notice;

• the annual cost of force-placed insurance,

or if unknown, a reasonable estimate;

• a statement that the institution has re-

ceived the hazard insurance information

that the borrower provided;

• a request that the borrower provide the

missing information; and

• a statement that the borrower will be

charged for insurance the institution pur-

chases for the time period in which the

institution cannot verify coverage.

74. Determine whether the reminder notice was

in the correct form. The notice must provide

certain information in bold text and, other

than the specific statements listed above, the

institution cannot provide any information on

the reminder notice (though the institution

can provide additional information on sepa-

rate pages of paper contained in the same

transmittal) (12 CFR 1024.37(d)(3)-(4)).

Sample notices are contained in appendix

MS-3(B) and (C) to 12 CFR part 1024.

75. Determine whether, by the end of the 15-day

period after the institution sent the reminder

notice, the borrower provided evidence that

it has had hazard insurance that complies

with the loan contract continuously in place.

As evidence, the institution may require a

copy of the borrower’s hazard insurance

policy declaration page, the borrower’s insur-

ance certificate, the borrower’s insurance

policy, or other similar forms of written

confirmation (12 CFR 1024.37(c)(1)(iii) and

12 CFR part 1024, supp. I, comment 1024.37

(c)(1)(iii)-2).

Assessing Charges or Fees for Renewing or

Replacing Force-Placed Insurance

If the institution assessed a charge or fee on a

borrower for renewing or replacing force-placed

insurance, complete the following.

76. Determine whether the institution provided a

written renewal notice to the borrower at least

45 days before assessing any fee or charge

(12 CFR 1024.37(e)(1)(i)).

77. Determine whether the renewal notice in-

cludes the following information (12 CFR

1024.37(e)(2)). Sample language for the

renewal of force-placed insurance notice is

contained in appendix MS-3(D) to 12 CFR

part 1024.

• the date of the renewal notice;

• the institution’s name and mailing address;

• the borrower’s name and mailing address;

• a statement that requests the borrower to

update the hazard insurance information

for the borrower’s property and that identi-

fies the property by its physical address;

• a statement that the institution previously

purchased force-placed insurance at the

borrower’s expense because the institution

did not have evidence that the borrower

had hazard insurance coverage;

• a statement that the force-placed insur-

ance has expired or is expiring, as appli-

cable, and that the institution intends to

renew or replace it because hazard insur-

ance is required on the property;

• a statement that the insurance coverage

the institution has purchased or will pur-

chase may cost significantly more than,

and provide less coverage than, insurance

purchased by the borrower, and identify-

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 45 (11/15)

ing the annual premium cost of force-

placed insurance or a reasonable esti-

mate;

• a statement that if the borrower purchases

hazard insurance, the borrower should

promptly provide the institution with insur-

ance information;

• a description of the requested insurance

information and how the borrower may

provide such information, and if appli-

cable, that the requested information must

be in writing;

• the institution’s telephone number for bor-

rower inquiries; and

• a statement advising the borrower to

review additional information provided in

the same mailing (if applicable).

78. Determine whether the renewal notice was in

the correct form. The notice must provide

certain information in bold text and, other

than the specific statements listed above, the

institution cannot provide any information on

the renewal notice (though the institution can

provide additional information on separate

pages of paper contained in the same

transmittal) (12 CFR 1024.37(e)(3)-(4)). A

sample notice is contained in appendix

MS-3(D) to 12 CFR part 1024.

79. Determine whether in the 45 days after

sending the renewal notice the institution

received evidence demonstrating that the

borrower had purchased hazard insurance

coverage (12 CFR 1024.37(e)(1)(ii)). As evi-

dence, the institution may require a copy of

the borrower’s hazard insurance policy dec-

laration page, the borrower’s insurance cer-

tificate, the borrower’s insurance policy, or

other similar forms of written confirmation.

General Mailing Requirements, Canceling

Force-Placed Insurance, and Bona Fide and

Reasonable Fee Requirements

80. If the institution mailed any of the written

initial, reminder, or renewal notices (12 CFR

1024.37(c)(1)(i), (c)(1)(ii), or (e)(1)), deter-

mine whether the servicer used a class of

mail not less than first-class mail (12 CFR

1024.27(f)).

81. If the institution received evidence that the

borrower had required hazard insurance

coverage in place, determine whether the

institution did the following within 15 days:

• canceled the force-placed insurance;

• refunded force-placed insurance premi-

ums charges and fees for the period of

overlapping coverage; and

• removed all force-placed charges and

fees from the borrower’s account for the

period of overlapping coverage (12 CFR

1024.37(g)).

82. Determine whether all fees or charges as-

sessed on the borrower related to force-

placed insurance are bona fide and reason-

able (except for charges subject to state

regulation and charges authorized by the

Flood Disaster Protection Act of 1973). A

“bona fide and reasonable charge” is one

that is reasonably related to the institution’s

cost of providing the service and is not

otherwise prohibited by law (12 CFR 1024.37

(h)).

General Servicing Policies, Procedures,

and Requirements—12 CFR 1024.38

Applicability: The general servicing policies, pro-

cedures, and requirements apply to all mortgage

loans, as that term is defined in 12 CFR 1024.31,

except that the requirements do not apply to (i)

small servicers, as that term is defined in 12 CFR

1026.41(e);

(ii) reverse mortgage transactions, as

that term is defined in 12 CFR 1026.33(a); and (iii)

qualified lenders, as defined under the Farm Credit

Act of 1971 and accompanying regulations.

Policies and Procedures—Accessing and

Providing Timely and Accurate Information

83. Determine whether the institution has poli-

cies and procedures that are reasonably

designed to ensure that it has access to and

provides timely and accurate information (12

CFR 1024.38(a) and (b)(1)). This includes

policies and procedures that are reasonably

designed to ensure the following:

• providing accurate and timely disclosures

to the borrower;

• investigating, responding to, and making

27. An institution qualifies as a small servicer if it either (a)

services, together with any affiliates, 5,000 or fewer mortgage

loans, as that term is used in 12 CFR 1026.41(a)(1), for all of which

the institution (or an affiliate) is the creditor or assignee; (b) is a

Housing Finance Agency, as defined in 24 CFR 266.5 (12 CFR

1026.41(e)(4)(ii)); or (c) is a nonprofit entity (defined in 12 CFR

1026.41(e)(4)(ii)(C)(1)) that services 5,000 or fewer mortgage

loans, including any mortgage loans serviced on behalf of

associated nonprofit entities (defined in 12 CFR 1026.41(e)(4)(ii)

(C)(2)), for all of which the servicer or an associated nonprofit

entity is the creditor. The following mortgage loans are not

considered in determining whether a servicer qualifies as a small

servicer: (a) mortgage loans voluntarily serviced by the servicer

for a creditor or assignee that is not an affiliate of the servicer and

for which the servicer does not receive any compensation or fees,

(b) reverse mortgage transactions, and (c) mortgage loans

secured by consumers’ interests in timeshare plans (12 CFR

1026.41(e)(4)(iii)).

Real Estate Settlement Procedures Act

46 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

corrections in response to borrowers’ com-

plaints, including promptly obtaining infor-

mation from service providers to investi-

gate and if applicable correct errors

resulting from actions of service providers;

• providing borrowers with accurate and

timely information and documents in re-

sponse to borrower requests for informa-

tion with respect to the borrower’s mort-

gage loan;

• providing owners and assignees of mort-

gage loans with accurate and current

information and documents about all the

mortgage loans they own, including infor-

mation about the institution’s evaluations of

borrowers for loss mitigation options and

loss mitigation agreements with borrowers;

• submitting accurate and current informa-

tion and documents that comply with

applicable law during the foreclosure pro-

cess; and

• upon learning of a borrower’s death,

promptly communicating with the borrow-

er’s successor in interest concerning the

secured property.

Policies and Procedures—Proper Evaluation

of Loss Mitigation Applications

84. Determine whether the institution has poli-

cies and procedures that are reasonably

designed to ensure that its personnel prop-

erly evaluate loss mitigation applications (12

CFR 1024.38(a) and (b)(2)). This includes

policies and procedures that are reasonably

designed to ensure the following:

• providing accurate information regarding

available loss mitigation options from the

owner or assignee of the borrower’s loan;

• identifying with specificity all loss mitiga-

tion options for which a borrower may be

eligible, including identifying, with respect

to each owner or assignee, all of the loss

mitigation options the institution may con-

sider when evaluating a borrower, as well

as the criteria the institution should apply

for each option;

• providing the loss mitigation personnel

assigned to the borrower’s mortgage loan

pursuant to 12 CFR 1026.40 with prompt

access to all of the documents and infor-

mation that the borrower submitted in

connection with a loss mitigation option;

• identifying the documents and information

a borrower must submit to complete a loss

mitigation application; and

• in response to a complete loss mitigation

application, properly evaluating the bor-

rower for all eligible loss mitigation options

pursuant to any requirements established

by the owner or assignee of the mortgage

loan, even if those requirements are other-

wise beyond the requirements of 12 CFR

1024.41.

Policies and Procedures—Oversight of

Servicer Providers

85. Determine whether the institution has poli-

cies and procedures that are reasonably

designed to facilitate oversight of, and com-

pliance by, service providers (12 CFR

1024.38(a) and (b)(3)). This includes policies

and procedures that are reasonably de-

signed to ensure the following:

• providing appropriate personnel with ac-

cess to accurate and current documents

and information concerning the service

providers’ actions;

• facilitating periodic reviews of service pro-

viders; and

• facilitating the sharing of accurate and

current information regarding the status of

a borrower’s loss mitigation application

and any foreclosure proceeding among

appropriate institution personnel, including

the loss mitigation personnel assigned to

the borrower’s mortgage loan, and appro-

priate service provider personnel, includ-

ing service provider personnel responsible

for handling foreclosure proceedings.

Policies and Procedures—Transfer of

Information

86. Determine whether the institution has poli-

cies and procedures that are reasonably

designed to facilitate the transfer of informa-

tion during servicing transfers (12 CFR

1024.38(a) and (b)(4)). This includes policies

and procedures that are reasonably de-

signed to ensure the following:

• for a transferor servicer, the timely and

accurate transfer of all information and

documents in its possession and control

related to a transferred mortgage loan to

the transferee servicer in a manner that

ensures its accuracy and that allows the

transferee to comply with the terms of the

mortgage loan and applicable law, includ-

ing any information about the status of any

loss mitigation agreements or discussions

with the borrower and any analysis per-

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 47 (11/15)

formed with respect to potential recovery

from non-performing mortgage loans; and

• for a transferee servicer, identifying neces-

sary documents or information that may not

have been transferred, obtaining such

missing documentation or information from

the transferor servicer (for documents and

information related to loss mitigation, the

transferee’s policies and procedures must

address obtaining missing documents from

the transferor servicer before attempting to

obtain such documents from the bor-

rower).

Policies and Procedures—Notifying

Borrowers of Error Notice and Information

Request Procedures

87. Determine whether the institution has poli-

cies and procedures that are reasonably

designed to inform borrowers of procedures

for submitting written error notices and

written information requests (12 CFR

1024.38(a) and (b)(5)). This includes policies

and procedures reasonably designed to

ensure that the institution informs borrowers

who are dissatisfied with the institution’s

response to oral complaints or information

requests of the procedures for submitting

written error notices under 12 CFR 1024.35

and written information requests under 12

CFR 1024.36.

Records Maintenance—Accurate Records

88. For any mortgage loan, determine if the

institution is retaining accurate records that

document actions with respect to the mort-

gage loan account (which includes any

mortgage loan that has been transferred or

paid in full). The institution must retain these

records until one year after the loan is

discharged or the institution transfers servic-

ing for the mortgage loan to a transferee

servicer. (12 CFR 1024.38(c)(1)).

Records Maintenance—Facilitating

Aggregation of Information

89. For documents or information created on or

after January 10, 2014, determine whether

the institution maintains the following five

items for each mortgage loan file in a manner

that allows the institution to aggregate these

items into a servicing file within five days:

• a schedule of all credits and debits to the

account (including escrow accounts and

suspense accounts);

• a copy of the security instrument that

establishes the lien securing the mortgage

loan;

• any notes created by institution personnel

reflecting communications with the bor-

rower concerning the account;

• a report of the data fields relating to the

borrower’s account created by the institu-

tion’s electronic systems (if applicable);

and

• copies of any information or documents

provided by the borrower to the institution

in connection with written error notices or

loss mitigation (12 CFR 1024.38(c)(2)).

Early Intervention Requirements for

Certain Borrowers—12 CFR 1024.39

Applicability: The early intervention requirements

apply to only those mortgage loans, as that term is

defined in 12 CFR 1024.31, that are secured by the

borrower’s principal residence (12 CFR 1024.30(c)

(2)). The requirements do not apply to (i) small

servicers, as that term is defined in 12 CFR

1026.41(e);

(ii) reverse mortgage transactions, as

that term is defined in 12 CFR 1026.33(a); and (iii)

qualified lenders, as defined under the Farm Credit

Act of 1971 and accompanying regulations (12

CFR 1024.30(b)). Additionally, institutions are not

required to comply with the live contact and written

notice requirements if doing so would violate

applicable law (12 CFR 1024.39(c)). Finally, insti-

tutions are exempted from the early intervention

requirements (i) as to borrowers who are in

bankruptcy,

and (ii) if the institution is subject to

28. An institution qualifies as a small servicer if it either (a)

services, together with any affiliates, 5,000 or fewer mortgage

loans, as that term is used in 12 CFR 1026.41(a)(1), for all of which

the institution (or an affiliate) is the creditor or assignee, (b) is a

Housing Finance Agency, as defined in 24 CFR 266.5 (12 CFR

1026.41(e)(4)(ii)); or (c) is a nonprofit entity (defined in 12 CFR

1026.41(e)(4)(ii)(C)(1)) that services 5,000 or fewer mortgage

loans, including any mortgage loans serviced on behalf of

associated nonprofit entities (defined in 12 CFR 1026.41(e)(4)(ii)

(C)(2)), for all of which the servicer or an associated nonprofit

entity is the creditor. The following mortgage loans are not

considered in determining whether a servicer qualifies as a small

servicer: (a) mortgage loans voluntarily serviced by the servicer

for a creditor or assignee that is not an affiliate of the servicer and

for which the servicer does not receive any compensation or fees,

(b) reverse mortgage transactions, and (c) mortgage loans

secured by consumers’ interests in timeshare plans (12 CFR

1026.41(e)(4)(iii)).

29. With respect to any portion of the mortgage debt that is not

discharged through bankruptcy, a servicer must resume compli-

ance with the early intervention requirement after the first

delinquency that follows the earliest of the following: (i) the

borrower’s bankruptcy case is dismissed, (ii) the borrower’s

bankruptcy case is closed, or (iii) the borrower receives a general

discharge of debts under the Bankruptcy Code (11 U.S.C. 101 et

seq.). However, a servicer is not required to communicate with a

borrower in any way that would violate applicable bankruptcy law

or a court order in a bankruptcy case, and a servicer may adapt

the early intervention requirement in any manner believed

necessary. A servicer also is not required to comply with the early

Real Estate Settlement Procedures Act

48 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

the Fair Debt Collection Practices Act (FDCPA) and

the borrower has sent an FDCPA “cease commu-

nication” notification with respect to the mortgage

loan (12 CFR 1024.39(d)).

Complete the following for any delinquent bor-

rowers (which, for purposes of 12 CFR 1024.39, do

not include borrowers performing as agreed under

a loss mitigation agreement).

Live Contact

90. Determine whether the institution made good

faith efforts to establish live contact with the

borrower within 36 days after each time the

borrower became delinquent (12 CFR

1024.39(a)). A delinquency begins each time

a borrower fails to make a payment sufficient

to cover principal, interest, and (if appli-

cable) escrow for a given billing cycle.

91. After the institution established live contact,

determine whether the institution promptly

informed the borrower of loss mitigation

options, if appropriate (as determined based

on the institution’s reasonable discretion) (12

CFR 1024.39(a)).

Written Notice

92. Determine whether the institution sent a

written notice to the borrower within 45 days

after the borrower became delinquent (12

CFR 1024.39(b)(1)). The institution does not

need to send the notice to a borrower more

than once in a 180-day period.

93. Determine whether the notice included the

following items (12 CFR 1024.39(b)(2)).

Sample language for the notice is contained

in appendix MS-4(A), MS-4(B), and MS-4(C)

to 12 CFR part 1024.

• a statement encouraging the borrower to

contact the institution;

• the telephone number to access assigned

loss mitigation personnel;

• a brief description of examples of loss

mitigation options that may be available to

the borrower (if applicable);

• loss mitigation application instructions or

instructions as to how to obtain more

information about loss mitigation options

(such as by contacting the institution), if

applicable; and

• either the CFPB’s or HUD’s website to

access homeownership counselors or

counseling organizations list and HUD’s

toll-free number to access homeownership

counselors or counseling organizations.

Continuity of Contact—12 CFR 1024.40

Applicability: The continuity of contact require-

ments apply to only those mortgage loans, as that

term is defined in 12 CFR 1024.31, that are secured

by the borrower’s principal residence (12 CFR

1024.30(c)(2)). The requirements do not apply to (i)

small servicers, as that term is defined in 12 CFR

1026.41(e);

(ii) reverse mortgage transactions, as

that term is defined in 12 CFR 1026.33(a); and (iii)

qualified lenders, as defined under the Farm Credit

Act of 1971 and accompanying regulations (12

CFR 1024.30(b)).

94. Determine whether the institution had poli-

cies and procedures reasonably designed to

assign personnel to a delinquent borrower

by the time the written early intervention

notice was provided, and in any event, within

45 days after the borrower became delin-

quent (12 CFR 1024.40(a)).

95. Determine whether the institution had poli-

cies and procedures reasonably designed to

ensure that the assigned personnel were

available, via telephone, to answer the bor-

rower’s questions and (as applicable) assist

the borrower with available loss mitigation

options until the borrower has made, without

incurring a late charge, two consecutive

mortgage payments in accordance with the

terms of a permanent loss mitigation agree-

ment (12 CFR 1024.40(a)(2)).

96. Determine whether the institution had poli-

cies and procedures reasonably designed to

ensure that, if a borrower contacts the

assigned personnel and does not immedi-

ately receive a live response, the institution

intervention requirement for any portion of the mortgage debt that

was discharged under the Bankruptcy Code or if a bankruptcy

case is revived (12 CFR 1024.39(d)).

The bankruptcy exception applies if two or more borrowers are

joint obligors with primary liability on a mortgage loan and any one

of the borrowers is in bankruptcy. For example, if a husband and

wife jointly own a home and the husband files for bankruptcy, the

servicer is exempt from the early intervention requirements as to

both the husband and wife (12 CFR part 1024, supp. I., comment

1024.39(d)(1)-3).

30. An institution qualifies as a small servicer if it either (a)

services, together with any affiliates, 5,000 or fewer mortgage

loans, as that term is used in 12 CFR 1026.41(a)(1), for all of which

the institution (or an affiliate) is the creditor or assignee, (b) is a

Housing Finance Agency, as defined in 24 CFR 266.5 (12 CFR

1026.41(e)(4)(ii)); or (c) is a nonprofit entity (defined in 12 CFR

1026.41(e)(4)(ii)(C)(1)) that services 5,000 or fewer mortgage

loans, including any mortgage loans serviced on behalf of

associated nonprofit entities (defined in 12 CFR 1026.41(e)(4)(ii)

(C)(2)), for all of which the servicer or an associated nonprofit

entity is the creditor. The following mortgage loans are not

considered in determining whether a servicer qualifies as a small

servicer: (a) mortgage loans voluntarily serviced by the servicer

for a creditor or assignee that is not an affiliate of the servicer and

for which the servicer does not receive any compensation or fees,

(b) reverse mortgage transactions, and (c) mortgage loans

secured by consumers’ interests in timeshare plans (12 CFR

1026.41(e)(4)(iii)).

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 49 (11/15)

can provide a live response in a timely

manner (12 CFR 1024.40(a)(3)).

97. Determine whether the institution maintains

policies and procedures reasonably de-

signed to ensure that the assigned personnel

can perform, among others, the following

tasks:

• provide the borrower with accurate infor-

mation about available loss mitigation op-

tions, including the steps the borrower

must take to be evaluated for such options,

including how to complete a loss mitigation

application or appeal a denial of a loan

modification option (if applicable);

• provide the borrower with accurate infor-

mation about the status of any loss mitiga-

tion application submitted;

• provide the borrower with accurate infor-

mation about the circumstances under

which the institution may refer the account

to foreclosure;

• provide the borrower with accurate infor-

mation about applicable loss mitigation

deadlines;

• timely retrieve a complete record of the

borrower’s payment history and all written

information the borrower has provided to

the institution (or the institution’s predeces-

sors) in connection with a loss mitigation

application, and provide these documents

to other persons required to evaluate the

borrower for available loss mitigation op-

tions; and

• provide the borrower with information about

submitting a written error notice or written

request for information (12 CFR 1024.40

(b)).

Loss Mitigation Procedures—12 CFR

1024.41

Applicability: The loss mitigation procedure require-

ments apply to only those mortgage loans, as that

term is defined in 12 CFR 1024.31, that are secured

by the borrower’s principal residence (12 CFR

1024.30(c)(2)). Except for the requirements of

1024.41(j), the loss mitigation procedure require-

ments do not apply to (i) small servicers, as that

term is defined in 12 CFR 1026.41(e);

(ii) reverse

mortgage transactions, as that term is defined in 12

CFR 1026.33(a); and (iii) qualified lenders, as

defined under the Farm Credit Act of 1971 and

accompanying regulations (12 CFR 1024.30(b)).

Calculating time periods: 12 CFR 1024.41 pro-

vides borrowers certain protections depending on

whether the institution receives a complete loss

mitigation application at least a specified number

of days before a foreclosure sale. See, e.g., 12 CFR

1024.41(c)(1) (37 days), and 12 CFR 1024.41(e)

and (h) (90 days). These time periods are calcu-

lated as of the date the servicer receives a

complete loss mitigation application. Thus, sched-

uling or rescheduling a foreclosure sale after the

servicer receives the complete loss mitigation

application will not affect the borrower’s protections

(12 CFR part 1024, supp. I., comment 1024.41(b)

(3)-2). If no foreclosure sale is scheduled as of the

date the servicer receives a complete loss mitiga-

tion application, the application is considered

received more than 90 days before a foreclosure

sale (12 CFR part 1024, supp. I., comment

1024.41(b)(3)-1).

Definition of first notice or filing: 12 CFR 1024.41

includes certain prohibitions on making the first

notice or filing for a judicial or non-judicial foreclo-

sure, and provides borrowers certain protections

depending on whether such a notice or filing has

been made. Whether a particular document quali-

fies as the first notice or filing depends on the

foreclosure process under the applicable state law

at issue:

• Judicial foreclosure. Where foreclosure

procedure requires a court action or pro-

ceeding, the first notice or filing is the

earliest document required to be filed with

a court or other judicial body to commence

the action or proceeding. Depending on

the particular foreclosure process, ex-

amples of these documents could be a

complaint, petition, order to docket, or

notice of hearing;

• Non-judicial foreclosure—recording or pub-

lication requirement. Where foreclosure

procedure does not require an action or

court proceeding (such as under a power

of sale), the first notice or filing is the

earliest document required to be recorded

or published to initiate the foreclosure

process; or

31. An institution qualifies as a small servicer if it either (a)

services, together with any affiliates, 5,000 or fewer mortgage

loans, as that term is used in 12 CFR 1026.41(a)(1), for all of which

the institution (or an affiliate) is the creditor or assignee, (b) is a

Housing Finance Agency, as defined in 24 CFR 266.5 (12 CFR

1026.41(e)(4)(ii)); or (c) is a nonprofit entity (defined in 12 CFR

1026.41(e)(4)(ii)(C)(1)) that services 5,000 or fewer mortgage

loans, including any mortgage loans serviced on behalf of

associated nonprofit entities (defined in 12 CFR 1026.41(e)(4)(ii)

(C)(2)), for all of which the servicer or an associated nonprofit

entity is the creditor. The following mortgage loans are not

considered in determining whether a servicer qualifies as a small

servicer: (a) mortgage loans voluntarily serviced by the servicer

for a creditor or assignee that is not an affiliate of the servicer and

for which the servicer does not receive any compensation or fees,

(b) reverse mortgage transactions, and (c) mortgage loans

secured by consumers’ interests in timeshare plans (12 CFR

1026.41(e)(4)(iii)).

Real Estate Settlement Procedures Act

50 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

• Non-judicial foreclosure—no recording or

publication requirement. Where foreclo-

sure procedure does not require an action

or court proceeding, and also does not

require any document to be recorded or

published, the first notice or filing is the

earliest document that establishes, sets, or

schedules a date for the foreclosure sale.

Note that a document provided to the borrower

but not initially required to be filed, recorded, or

published is not considered the first notice or filing

on the sole basis that the documents must later be

included as an attachment accompanying another

document that is required to be filed, recorded, or

published to carry out a foreclosure (12 CFR part

1024, supp. I., comment 1024.41(f)-1).

Applications Received at Least 45 Days

before a Foreclosure Sale (Review for

Completeness)

Complete the following for any loss mitigation

application that the institution received at least 45

days before a foreclosure sale.

98. Determine whether the institution promptly

determined whether the application was

complete (12 CFR 1024.41(b)(1)). A loss

mitigation application is viewed expansively

and includes oral inquiries by the borrower

where the borrower also provides information

the institution would use to evaluate loss

mitigation applications, or where a borrower

requests that the institution determines

whether the borrower is “prequalified” for a

loss mitigation application by evaluating the

borrower against preliminary criteria (12 CFR

part 1024, supp. I., comment 1024.41(b)(1)-

2). An institution is required to comply with

the loss mitigation procedures for only a

single complete loss mitigation application

for a borrower’s mortgage loan account (12

CFR 1024.41(i)).

Complete Applications—Written Acknowledgement

Complete the following if the application was

complete.

99. Determine whether the institution provided

written acknowledgement to the borrower

within five days (excluding legal public

holidays, Saturdays, and Sundays) after

receiving the loss mitigation application. The

acknowledgement must state that the appli-

cation was complete and include a state-

ment that the borrower should consider

contacting servicers of any other mortgage

loans secured by the same property to

discuss available loss mitigation options (12

CFR 1024.41(b)(2)(1)(B)).

Facially Complete Applications—Additional

Information or Corrected Documents Required

Complete the following if the application was

facially complete and the institution later discov-

ered that additional information or corrections to a

previously submitted document were required to

complete the application. A loss mitigation appli-

cation is facially complete if either (i) the institu-

tion’s initial notice under 12 CFR 1024.41(b)

advised the borrower that the application was

complete or (ii) the institution’s initial notice under

12 CFR 1024.41(b) requested additional informa-

tion from the borrower to complete the application

and the borrower submitted such additional infor-

mation.

100. Determine whether, upon discovering that

additional information or corrected docu-

ments were required to complete the appli-

cation, the institution (i) promptly requested

the missing information or corrected docu-

ments and (ii) gave the borrower a reason-

able opportunity to complete the application

(12 CFR 1024.41(c)(2)(iv)). A reasonable

opportunity depends on the particular facts

and circumstances, but must provide the

borrower sufficient time to gather the neces-

sary information and documents (12 CFR

part 1024, supp. I., comment 1024.41(c)(2)

(iv)-1).

101. Determine whether the institution treated the

borrower’s application as complete for pur-

poses of 12 CFR 1024.41(f)(2) (“Application

received before foreclosure referral”) and 12

CFR 1024(g) (“Prohibition on foreclosure

sale”) until the borrower is given a reason-

able opportunity to submit additional informa-

tion or corrected documents (12 CFR 1024.41

(c)(2)(iv)).

Incomplete Applications—Written Acknowledge-

ment, Reasonable Diligence, and Short-Term

Forbearance

Complete the following if the application was

incomplete.

102. Determine whether the institution provided

written acknowledgement to the borrower

within five days (excluding legal public

holidays, Saturdays, and Sundays) after

receiving the loss mitigation application. The

acknowledgement must (1) state that the

application was incomplete, (2) identify the

additional information needed to complete

the application, (3) identify a reasonable

date by which the borrower must submit the

additional information, and (4) include a

statement that the borrower should consider

contacting servicers of any other mortgage

loans secured by the same property to

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 51 (11/15)

discuss available loss mitigation options (12

CFR 1024.41(b)(2)). Except when doing so

would be impracticable (such as requesting

a borrower to submit documentation in less

than seven days), a reasonable deadline is

generally one of the following that maximizes

the borrower’s loss mitigation protections: (a)

the date by which any document or informa-

tion submitted by the borrower will be stale or

invalid, (b) the 120th day of the borrower’s

delinquency, (c) 90 days before a foreclo-

sure sale, or (d) 38 days before a foreclosure

sale (12 CFR part 1024, supp. I., comment

1024.41(b)(2)(ii)-1).

103. Determine whether the institution exercised

reasonable diligence in obtaining docu-

ments and information to complete the

application (12 CFR 1024.41(b)(1)). Ex-

amples of reasonable diligence include: (a)

where the institution requires additional infor-

mation from the borrower (such as an

address or telephone number to verify em-

ployment), promptly contacting the borrower

to obtain the information; and (b) where the

borrower’s loan is transferred to the institu-

tion from another servicer, reviewing docu-

ments the institution received from the prior

servicer to determine if the required informa-

tion is contained in those documents. Addi-

tionally, if the institution offered the borrower

a short-term forbearance plan based upon

information contained in an incomplete loss

mitigation application, reasonable diligence

would involve notifying the borrower that they

are being offered a payment forbearance

program based on an evaluation of an

incomplete loss mitigation application, and

that the borrower has the option of complet-

ing the application to receive a full evaluation

for all loss mitigation options available to the

borrower (12 CFR part 1024, supp. I.,

comment 1024.41(b)(1)-4.iii).

104. If the institution offered the borrower a

short-term forbearance plan based upon

information contained in an incomplete loss

mitigation application, determine whether the

institution either (a) made the first notice or

filing for any judicial or non-judicial foreclo-

sure process, (b) moved for foreclosure

judgment or an order of sale, or (c) con-

ducted a foreclosure sale while the borrower

was performing under such plan (12 CFR

1024.41(c)(2)(iii)). A short-term forbearance

program allows a borrower to forgo making

certain payments or portions of payments

due over a period of no more than six months

(12 CFR part 1024, supp. I., comment

41(c)(2)(iii)-1).

Complete Applications Received More than

37 Days before a Foreclosure Sale

(Evaluation of Application)

Complete the following for any complete loss

mitigation application that the institution received

more than 37 days before a foreclosure sale.

105. Determine whether, within 30 days, the

institution (i) evaluated the borrower for all

available loss mitigation options and (ii)

provided the borrower with a notice stating

(a) which loss mitigation options (if any) the

institution would offer the borrower; (b) the

amount of time the borrower has to accept or

reject an offered loss mitigation option pur-

suant to 12 CFR 1024.41(e); and (c) if

applicable, that the borrower has the right to

appeal a denial of a loan modification option

and the time period for making any appeal

pursuant to 12 CFR 1024.41(h) (12 CFR

1024.41(c)).

106. If the institution denied the application,

determine whether the notice also stated the

specific reason or reasons for denying each

such option, and, if applicable, that the

borrower was not evaluated on other criteria

(12 CFR 1024.41(d)).

Denial of Loan Modification Option Based upon

Investor Criteria; Use of a Waterfall

Complete the following if the institution denied an

application for a loan modification option due to a

failure to meet investor guidelines.

107. Determine whether the institution identified in

its notice to the borrower (i) the owner or

assignee of the mortgage loan and (ii) the

specific criteria the borrower failed to meet

(12 CFR 1024.41(d), 12 CFR Part 1024,

supp. I., comment 41(d)-1). (NOTE: if the

borrower’s application was evaluated under

an investor’s waterfall and the borrower

qualified for a particular option, it is sufficient

for the institution to inform the borrower that

the investor’s requirements include a ranking

of options and that an offer of a loan

modification option necessarily results in a

denial of any other options ranked below the

option for which the borrower is eligible (12

CFR part 1024, supp. I., comment 41(d)-1).

Denial Based upon Net Present Value Calculation

Complete the following if the institution denied the

application due to a net present value calculation.

108. Determine whether the institution disclosed

the inputs used in that calculation (12 CFR

part 1024, supp. I., comment 41(d)-2).

Real Estate Settlement Procedures Act

52 (11/15) • Regulation X—RESPA Consumer Compliance Handbook

Denial Using Hierarchy of Eligibility Criteria

Complete the following if the institution established

a hierarchy of eligibility criteria and, after reaching

the first criterion that causes a denial, did not

evaluate whether the borrower would have satisfied

the remaining criteria.

109. Determine whether the institution identified in

the notice: (i) the specific reason or reasons

why the borrower was actually rejected and

(ii) that the borrower was not evaluated on

other criteria. An institution is not required to

determine or disclose whether a borrower

would have been denied based on other

criteria if the servicer did not actually evalu-

ate these additional criteria (12 CFR part

1024, supp. I., comment 41(d)-4).

Time for Acceptance of an Offered Loss

Mitigation Option

Complete the following if the institution offered the

borrower a loss mitigation option.

Complete Applications Received at Least 90 Days

before a Foreclosure Sale

Complete the following if institution offered a loss

mitigation option and had received the complete

application at least 90 days before a foreclosure

sale.

110. Determine whether the institution provided

the borrower with at least 14 days to accept

or reject any offered loan modification option

after the servicer provided notice of the offer

to the borrower (12 CFR 1024.41(e)). This

acceptance period can be extended if,

within 14 days, the borrower makes an

appeal of a denial of any loan modification

option (12 CFR 1024.41(e)(2)(iii)). In the

event of an appeal, the borrower’s time for

acceptance is extended to 14 days after the

institution provides a notice of its determina-

tion of the appeal under 12 CFR 1024.41(e)

(iii).

Complete Applications Received Between 37 and

90 days before a Foreclosure Sale

Complete the following if institution offered a loss

mitigation option and had received the complete

application fewer than 90 days before a foreclosure

sale but more than 37 days before the sale.

111. Determine whether the institution provided

the borrower with at least seven days to

accept or reject any offered loss mitigation

options after the servicer provided notice of

the offer to the borrower (12 CFR 1024.41(e)

(1)).

No Borrower Response to Offered Trial Loan

Modification Plan

Complete the following if the institution offered a

borrower a trial loan modification plan and the

borrower did not respond within seven or 14 days

(as applicable under 12 CFR 1024.41(e)(1)).

112. Determine (i) whether the borrower submit-

ted payments in accordance with the offered

plan and (ii) if so, whether the institution gave

the borrower a reasonable period of time to

fulfill any remaining requirements to accept

the plan (12 CFR 1024.41(e)(2)(ii)).

Prohibitions on Commencing Foreclosure

Proceedings and Dual Tracking

Complete the following for any borrower.

113. Determine whether the institution made any

first judicial or non-judicial foreclosure no-

tices or filings without meeting one of the

following conditions: (i) the borrower was

more than 120 days delinquent, (ii) the

foreclosure is based on a borrower’s viola-

tion of a due-on-sale clause, or (iii) the

institution is joining the foreclosure action of

a subordinate lienholder (12 CFR 1024.41(f)

(1)). (Note that this requirement as appli-

cable to small servicers is addressed below.)

Complete Applications Received during the

Pre-foreclosure Period

Complete the following if the institution received a

complete loss mitigation application either within

the first 120 days of delinquency or before the

institution made the first judicial or non-judicial

foreclosure notice or filing. Note that the following

does not apply if the foreclosure is based on a

borrower’s violation of a due-on-sale clause, or if

the institution is joining the foreclosure action of a

subordinate lienholder.

114. Determine whether the institution made the

first foreclosure notice or filing only after one

of the following occurred: (i) the institution

notified the borrower that the borrower is

ineligible for any loss mitigation option and if

an appeal is available, either the appeal

period expired or the appeal had been

denied; (ii) the borrower rejected all the

offered loss mitigation options; or (iii) the

borrower failed to perform under a loss

mitigation agreement (12 CFR 1024.41(f)(2)).

Complete Applications Received More than 37

Days before a Foreclosure Sale

Complete the following if the institution received a

complete loss mitigation application after the

institution initiated foreclosure but more than 37

days before a foreclosure sale.

Real Estate Settlement Procedures Act

Consumer Compliance Handbook Regulation X—RESPA • 53 (11/15)

115. Determine whether the institution improperly

conducted a foreclosure sale or moved for

foreclosure judgment or sale before one of

the following occurred: (i) the institution

notified the borrower that it had denied the

loss mitigation application for any loss miti-

gation option and if an appeal is available,

either the appeal period had expired or the

appeal had been denied; (ii) the borrower

rejected all the offered loss mitigation op-

tions; or (iii) the borrower fails to perform

under a loss mitigation agreement (12 CFR

1024.41(g)).

Appeal Process

Complete the following if (a) the institution denied a

complete loss mitigation application for any trial or

permanent loan modification option and (b) the

institution received that complete application (i)

before the borrower was more than 120 days

delinquent, (ii) before the institution made the first

judicial or non-judicial foreclosure notice or filing, or

(iii) at least 90 days before a foreclosure sale.

116. For any borrower who timely appealed a

denial of an available loan modification

option, determine whether the institution

provided a notice to the borrower within 30

days stating (i) whether it will offer the

borrower a loss mitigation option based on

the appeal and (ii) if applicable, how long the

borrower has to accept or reject this loss

mitigation option or a previously offered loss

mitigation option. (12 CFR 1024.41(h)(4)).

117. For any appeal that the institution granted,

determine whether the institution afforded

the borrower 14 days to accept or reject any

offered loan modification option (12 CFR

1024.41(h)(4)).

118. Determine whether the institution used differ-

ent personnel to evaluate the appeal than the

personnel who had evaluated the borrower’s

loss mitigation application (12 CFR 1024.41

(h)(3)).

Small Servicers

Complete the following if the institution is a small

servicer as that term is defined in 12 CFR

1026.41(e).

119. If the institution is a small servicer, determine

whether the institution made the first foreclo-

sure notice or filing before (i) the borrower

was more than 120 days delinquent, (ii) the

foreclosure is based on a borrower’s viola-

tion of a due-on-sale clause, or (iii) the

institution is joining a subordinate lienhold-

er’s foreclosure action (12 CFR 1024.41(j)).

120. If the institution is a small servicer and the

borrower is performing according to the

terms of a loss mitigation agreement, deter-

mine whether the institution (i) made the first

foreclosure notice or filing, (ii) moved for a

foreclosure judgment or order of sale, or (iii)

conducted a foreclosure sale (12 CFR

1024.41(j)).

Real Estate Settlement Procedures Act

54 (11/15) • Regulation X—RESPA Consumer Compliance Handbook