- May 31, 1994
- All Issuing Offices
- Amendments to Real Estate Settlement Procedures Act (RESPA) Regulation
The Department of Housing and Urban Development has amended RESPA regulations. The amendment is effective August 9, 1994, except for new exemptions. The new exemptions were effective March 14, 1994.
- Subordinate Liens (Effective August 9, 1994)
RESPA will apply to subordinate liens on residential real property.
- New HUD-1A (Effective August 9, 1994)
HUD has designed a new settlement form that may be used if there is a borrower and no seller (refinancing or subordinate lien financing). This form is the HUD-1A. Use of this form is optional. In the alternative, if there is a borrower and no seller the settlement agent may use the borrower's side of the HUD-1. The HUD-1A is available at Stewart Forms and Information.
- No Cost Closings (Effective August 9, 1994)
If a loan is a "no cost" or "no point" loan, payments made to settlement service providers (such as title companies) must be shown as P.O.C. (Paid Outside of Closing) on the good faith estimate and the HUD-1 or HUD-1A.
- New Exemptions (Effective March 14, 1994)
The following transactions are exempt from RESPA:
a. A loan on property constituting twenty-five or more acres.
b. A loan primarily for business, commercial or agricultural purpose. If the loan involves one or more individuals placing a lien on one-to-four family residential property, RESPA applies.
c. Temporary financing for less than two years. If the loan is used as or may be converted to permanent financing by the same lender, the exemption does not apply.
d. A construction loan to a bona fide builder (a person who regularly constructs one-to-four family residential structures for sale or lease), even if financing exceeds two years.
e. A loan secured by vacant land. The exemption does not apply if a structure will be constructed on the land within two years using loan proceeds.
f. An assumption, if the lender does not have the right to approve a subsequent purchaser.
g. A conversion of a loan to different terms consistent with the original mortgage provisions, as long as a new note is not required.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- 17.04 Real Estate Settlement Procedures Act (RESPA)
- Exceptions Manual: