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F ed er a l R eser ve Ba n k o f D allas

DALLAS, TEXAS

75222
C irc u la r No. 75-84
June 18, 1975

REAL ESTATE SETTLEMENT PROCEDURES A CT (RESPA)

TO ALL STATE MEMBER BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Enclosed is FEDERAL REGISTER material relating to the Real Estate Settlement
Procedures Act (P .L . 93-533) which is to become effective June 20, 1975. The material includes
copies of the Disclosure/Settlement Statement. This statement consists of a three page standard­
ized form. The firs t two pages are for the disclosure of settlement costs and w ere developed by
the Department of Housing and Urban Development (HUD) . Th e th ird page is for T r u t h - i n Lending disclosures and was developed by the Board of Governors of the Federal Reserve Sys­
tem. Instructions for completing all three pages of the statement are also included. It should
be noted that when the regulations w ere p rin te d , page 2 of HUD Form 1 on page 22455 was in te r­
changed with page 2 of HUD Form 1 on page 22462.
In addition, the FEDERAL REGISTER material includes HUD's Regulation X which im­
plements the Real Estate Settlement Procedures Act and provides instructions on the timing of
the disclosu res.
Not included in the FEDERAL REGISTER material is a copy of the Interpretation of Sec­
tion 226.102 of Regulation Z which seeks to c la rify questions on the use of the T ru th -in -L e n d in g
form (page 3 of the Interpretation) and compliance with RESPA and the T ru th -In -L e n d in g A ct. A
copy of this In terpretation, which was disseminated with the Board's Press Release dated May 12,
1975, is printed on the following pages.
Section 11 (a) of the Real Estate Settlement Procedures Act also adds a Section 25 to
the Federal Deposit Insurance Act (12 U . S . C . 1831) . This new section prohibits all insured
banks from making "any federally related mortgage loan to any agent, trustee, nominee, or
other person acting in a fid uciary capacity without the p rio r condition that the Identity of the
person receiving the beneficial interest of such loan shall at all times be revealed to the b a n k ."
Moreover, the Act authorizes the FDIC to request such banks to report to the FDIC "on the iden­
tity of such person and the nature and amount of the loan, discount, or other extension of credit"
and to exempt by regulation classes or types of transactions from these provisions if it d e te r­
mines that the req u ired disclosure with respect to these transactions w ill not m aterially advance
the purposes of the Act.
At the present time no exemption as to certain loan transactions has been made nor
have any specific requirements been established that the Identity of persons receiving the bene­
ficial interest in federally related mortgage loans be reported to the Federal superviso ry author­
ities. However, compliance by insured State member banks with the provisions of Section 25
should, of course, be reflected by the en try of the req u ired disclosures in appropriate bank
re c o rd s .
Questions arisin g on the use of the settlement cost disclosures should be directed to
HUD. Questions on the T ru th -in -L e n d in g disclosure may be directed to this Reserve Bank's
Regulations Department.

Sincerely yours,
T . W. Plant
First Vice President
Enclosure

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

CHAPTER II--FEDERAL RESERVE SYSTEM
SUBCHAPTER A--BO ARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[Reg. Z]
PART 226— TRUTH IN LENDING
D isclo su res m ade in connection with the R eal E state Settlem ent
P roced u res Act.
This interpretation is w ritten to cla rify the application of Regula­
tion Z to the standardized form , including Truth in Lending d isclo su re s and
in stru ction s, p rescrib ed by the Department of Housing and Urban Develop­
m ent to m eet the d isclo su re requirem ents of the Real Estate Settlem ent
P roced u res Act*

F or exam ple, the standardized form is designed for the

d isclo su re of loans and credit s a le s , and it should be used reg a rd less of
any differing requirem ents in Regulation Z.
Section 226. 1 0 2 -- P isc lo su r e s m ade in connection with the
Real E state Settlem ent P rocedures Act of 1974.
The Real E state Settlem ent P roced ures Act of 1974
(P. L. 93-533) requires the Department of Housing and Urban Development
to p re scr ib e a standardized form for the d isclo su re of settlem ent c o sts,
which m u st be given to home buyers in tran saction s which involve federally
related m ortgage loans. Section 4 of the statute sp ecifica lly req uires that
such form include a ll information and data required to be d isclo se d by the
F ed eral Truth in Lending Act.

A Truth in Lending d isclo su re form

(hereinafter referred to as "form") and instructions to be used in com ple­
ting such form have been p rescrib ed as a part of the standardized form.
B ecause of the unavoidable com plexity inherent in combining settlem ent and

credit c o sts into ohe form, the Requirements relating to thte u se of the
standardized form differ to som e degree from the requirem ents im posed
under Regulation Z.

It is the purpose of this interpretation to elim inate

any confusion as to the steps cred itors m u st take in com plying with the
Truth in Lending d isclosu re requirem ents in com pleting the form and to
cla rify the interrelationship between the Truth in Lending A ct and the
Real E state Settlem ent Procedures Act.
Sections 226.6(b), 2 2 6 .8 (c), and 226.8(d) of Regulation Z
ch a ra cterize cred it transactions as loans or credit s a le s and require
differing d isc lo su r e s for each.

The form is designed for the d isclo su re

of both cred it s a le s and loans.

The form should be used for consum er

credit tran saction s subject to the Real E state Settlem ent P roced ures Act
reg a rd less of whether the transaction m ay be ch aracterized as a loan
or a credit sa le and such use sh all not constitute a violation o f the Truth
in Lending Act.
Notwithstanding the provisions of § 226.8(a)(1), the form p r e ­
cludes the inclusion of the p rom issory note o r other instrum ent evidencing
the obligation.

Notwiths tan ding the p rovision s of § 22 6 .6 (c)(2 ), the form

precludes the inclusion of any inconsisten t State d isc lo su r e requirem ents.
Notwithstanding the provisions of § 226. 8(a), item ization and d isclo su re
of charges excludable from the finance charge under § 226.4(b) m ay be
made on the settlem ent costs portion of the combined form .
The form , when properly com pleted in accordance with
Regulation Z and the instructions provided with the form , constitutes
com pliance with the provisions o f § 226.6(a) relating to " clear, con­
spicuous, and m eaningful sequence" d isclo su re requirem ents.

(Under

§ 226. 6(a) cred ito rs m ust continue to d is c lo se m ore conspicuously the

te rm s "annual percentage rate " and "finance ch arg e" as w all a t m aking
num eric d isclo su res under the type sise req u irem en ts specified. ) H ie
in stru ctio ns accom panying the form p erm it c re d ito rs to d elate inappli­
cable d isclo su res, to substitute m ore p ertin en t d isclo su res fo r those
p resen tly included, to provide for additional space o r language w here
n ecessary to satisfy full disclosure, and to m ake additional d isclo su res
not p resen tly included w here such a re req u ired . Such p erm issiv e
changes to the form should be made in com pliance w ith § 226.6(a).
The form provides for the optional d isclo su re of the sim ple
annual ra te of co n tract in te re st. The d isclo su re of such ra te does not
constitute a violation of $ 226.6(c).
The definition of "federally rela ted m ortgage loan" provided
in § 3 of the Real E state Settlem ent P ro ced u res A ct (12 U. S. C. $2602)
could be in terp reted as requiring settlem ent co st d isclo su res in tra n s ­
actions which a re exem pt under | 226. 3. In such cases, the form need
not be provided.
The effective date of this in terp retatio n is June 20, 1975,
which coincides w ith that of the Real E state Settlem ent P ro ced u res Act.
(Interprets and applies 12 C. F . R. 226.4, 226.6, and 226.8)
By o rd er of the Board of G overnors, May 5, 1975.

(signed) G riffith L. Garwood
G riffith L. Garwood
A ssistant S ecretary of the Board
[SEAL]

THURSDAY, MAY 22, 1975
WASHINGTON, D.C.
Volume 40 ■

Number 100

.

PART III

DEPARTMENT OF
HOUSING
AND URBAN
DEVELOPMENT
Office of Assistant Secretary
for Housing Production and
Mortgage Credit-Federal
Housing Commissioner

Real Estate Settlement Procedures
and Costs

RULES AND REGULATIONS

22448
Title 24— Department of Housing and
Urban Development
SUBTITLE A— OFFICE OF THE
SECRETARY
[Docket No. R75-318]

PART 82— REAL ESTATE SETTLEMENT
PROCEDURES

On February 18, 1975, 40 PR 7072,
the Departm ent published a notice of
proposed rulemaking which would amend
Subtitle A by adding a new Part 82. This
part im plem ents sections 4, 5 and 6 of
the Real Estate Settlem ent Procedures
Act of 1974, 12 U.S.C. 2601, which pro­
vide for a settlem ent cost statem ent
form, a special inform ation booklet to be
distributed at tim e of loan application,
and an item ized disclosure of each charge
arising in connection w ith each settle­
ment that involves a federally related
mortgage loan transaction. A general no­
tice prescribing the text of the special
inform ation booklet is being published
concurrently with the regulations. The
final versions of the uniform disclosure
settlem ent statem ent, and the Truth in
Lending statem ent which is a part of it,
are included as Appendices A and B of
the regulations. The uniform disclosure
settlem ent statem ent is required by sec­
tion 4 of the Act to include the inform a­
tion and data required for relevant
transactions under the Federal Truth in
Lending Act and the regulations issued
thereunder by the Federal Reserve
Board. On March 24,1975, (40 FR 13008)
the Board published a proposed standard
Truth in Lending Statem ent to satisfy
the requirements of the Act. The Board’s
final revision of the form and instruc­
tions are included in these regulations as
Appendix B. As a result of the invitation
for public com m ent contained in the no­
tice for rulemaking, more than 500 re­
sponses have been received. The Depart­
m ent has considered each comment care­
fully and as a result has adopted certain
changes in both the regulations and the
accompanying form, as they were pro­
posed. The principal changes are as
follow s:
G eneral C o m m e n t s

A number of com m ents objected to the
overall concept of the Act, arguing that
the conduct of real estate transactions
was essentially a local m atter, that uni­
form ity in forms was im practical, that
advance disclosure would not be of as­
sistance to consumers, and that the pro­
cedures required by the Act would add
to paperwork and costs of lenders and
providers of settlem ent services.
C overage

Numerous comments requested that
the scope of coverage be defined. The
final regulations provide that they apply
to cases involving a purchase or transfer
of property. Refinancings, junior m ort­
gages, consumer borrowings, and other
cases in which there is no transfer of
title to the real estate are not covered.
Transfers in which an existing loan is
assumed or taken subject to are covered
only if the loan terms are modified or

final regulations clarify the term, so that
general advertising would not be re­
garded as a loan commitment. On the
other hand, suggestions that the term
be confined to w ritten com m itments were
not adopted, since under such a rule,
lenders m ight in some cases forego giv­
ing w ritten commitments.
Numerous commentators believed that
the lender or its employees were required
to prepare and transm it the advance dis­
closure. The final regulations have been
clarified to perm it the lender either to
do such work itself or to cause it to be
done by some other party, such as a title,
settlem ent, or escrow company or a law ­
yer. However, under the Act (section
6 (b )) the lender remains responsible.
Some comments raised questions con­
cerning the degree of efforts which the
lender or other person preparing the ad­
vance disclosure m ust exert to determine
the charges to be made for various serv­
ices. If no provider of a particular service
has been selected for the transaction at
the tim e of disclosure, the lender may
make an estim ate based on its knowledge
of general practices in the area. If a
provider has been selected, that provider
should be contacted and asked w hat his
fee will be, unless the lender already
knows the provider’s schedule of fees
and reasonably expects th at schedule to
be followed in the present case.
Advance disclosure of prorations of
taxes and assessm ents may be based on
estim ates if exact figures are not avail­
able. Such advance disclosure m ay be
based on the assumption that no taxes or
assessm ents are delinquent.
A number of comments asked if the
advance disclosure must be reissued if
more inform ation about settlem ent
charges become available to the lender
after the initial disclosure but prior to
settlem ent. Under the final regulations,
reissuance of the advance disclosure is
not required.
Some comments pointed out that the
retention-of-records requirements in the
proposed regulations were not clear and
were not identical to the requirements
for Truth in Lending statem ents. Under
the final regulations, copies of the ad­
vance disclosure and the settlem ent
statem ent m ust be retained by the lender
for two years, except where the loan
file is transferred, and copies m ust be
A dvance D is c lo su r e
subm itted to the Departm ent upon re­
The advance disclosure required by quest. This requirement will enable the
the Act m ust be made at least 12 days Departm ent to fulfill its statutory duty
prior to settlem ent unless the 12-day under section 14 of the Act to study and
period is waived. Many comments re­ investigate settlem ent costs and to report
quested that a period shorter than 12s to Congress thereon.
The proposed regulations required the
days be made standard, but section 6(a)*
of the Act does not leave this m atter to signatures of the borrower and the seller
on the advance disclosure statem ent, and
the Departm ent’s discretion.
In general, advance disclosure m ust be several comments objected to this proce­
given not later than 7 days after the date dure or requested clarification. In the
of the loan commitment. In cases in final regulations all requirements for
which a loan com m itment is made more signature on either the advance dis­
than 60 days before the anticipated date closure or the settlem ent statem ent have
of settlem ent, the disclosure may be been dropped.
M ailing of the advance disclosure is
given later than the loan commitment,
but not less than 60 days prior to settle­ perm itted by the final regulations, but
ment.
in certain cases the applicable tim e lim its
Many comments asked for a clarifica­ are 3 days earlier where advance dis­
tion of the term “loan com m itm ent”. The closure is mailed.

the lender imposes charges exceeding
$50.
The geographical coverage of the pro­
posed regulation was unclear, as several
comments pointed out. The final regula­
tions apply to all territories and posses­
sions of the United States in addition to
the continental United States and Puerto
Rico.
Several comments requested that ex­
clusions be made for agriculture property
and for builders or developers. In re­
sponse to these comments, the final
regulations do not apply to real estate
purchased for the purpose of resale to a
customer in the ordinary course of busi­
ness. The final regulations apply to m ort­
gages covering agricultural properties.
Although numerous com m ents requested
that the regulations not apply to corpo­
rations, partnerships, and other business
entities, such an exclusion was not made
and does not appear to be permissible.
Several comments asked th at sales of
vacant land be exempted from the regu­
lations. The final regulations exem pt
such land unless the proceeds of the
loan involved in the transaction are to
be used, in whole or in part, to finance
the construction of a dwelling. Several
comments requested clarification of the
coverage of mobile homes. The final reg­
ulations cover mobile homes and mobile
home lots only if both the mobile home
and the lot on which it is to be located
are being purchased with the proceeds
of the loan in question.
It was suggested that the effective date
of the regulations be extended beyond
June 20, 1975, in order to permit more
tim e for the persons who must im plem ent
the Act to study it, prepare forms, and
train their personnel. Section 19 of the
Act does not give the Department dis­
cretion in this regard.
In response to numerous requests, the
final regulations provide that lenders
may, w ithout special approval, place
their own covers on the special inform a­
tion booklets which m ust be given to loan
applicants. Other lim ited changes are
permitted, as set forth in the final regu­
lations or as approved by the Secretary.
Lenders may translate the booklet into
other languages for the benefit of their
customers, w ith the approval of the
Secretary.

FEDERAL REGISTER, VOL. 40 , NO. 160— THURSDAY, MAY 22, 1975

22449

RULES AND REGULATIONS
W aiver

of

A dvance D isc lo su r e

Several com m ents requested clarifica­
tion whether a seller or borrower can
bind the other by a waiver. The final
1 regulations specify th at each party who
has not received tim ely advance disclo­
sure .waives th is right, so that one party
cannot waive for the other.
^Numerous com m ents objected to the
shortness of the 18-day period processing
rule. The final regulations extend this
period to 21 days. The final regulations
provide th at advance disclosure may be
made prior to com m itment. This w ill en­
able lenders, by m aking advance disclo­
sure before com m itm ent as to loans re­
quiring speedy settlem ents, to be able to
hold settlem ent on such loans as soon as
the com m itm ent is issued.
Some com m ents objected to the 3-day
advance disclosure requirement in the
proposed regulations. The provisions in
the final regulations as to waiver take
into account the express directions in
the Act that, in its prescribing of the
waiver regulations and form, th e Secre­
tary should take in to account the need
to protect the borrower’s and seller’s
right to tim ely disclosure.
In keeping w ith th e Act, th e final regu­
lations require th a t the advance disclo­
sure be received by th e parties on or be­
fore the tim e of th e loan com m itm ent
but not less than 3 days prior to settle­
m ent in any waiver situation.
A number of com m ents pointed out
, that the execution of th e waiver by th e
lender served no purpose and th is re­
quirement was om itted in th e final regu­
lations. Sim ilarly, th e witness lines are
om itted from the waiver form.
S e t t l e m e n t S ta tem en t

J
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t

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Many of th e com m ents indicated a
lack of understanding of th e relationship
between the advance disclosure form and
the settlem ent statem ent. Although the
sam e basic form at is used for both, it is
permissible for lenders to print such
forms separately and to place titles on
them accordingly. The official version
published in these final regulations can
be used for both purposes by checking
the appropriate square near the top of
the form. Ordinarily som e of the entries
on th e settlem ent statem ent w ill differ
from those on the advance disclosure (because som e charges are different than
estim ated, or because th e date of actual
settlem ent is different from the date estim ated). The final regulations specify
that copies of the settlem ent statem ent
m ust be provided to th e buyer and seller
as soon after settlem ent as practicable,
and in no case later than three days after
settlem ent.
W hen charges are paid directly by the
borrower or seller, rather than paid
through th e settlem ent agent, som e com­
m ents asked w hether it would be neces­
sary to show them on th e forms. The final
regulations provide special rules for haz­
ard insurance charges, attorney’s fees
and charges for certain other services
independently procured by the borrower
or seller.

F o rm D e s ig n

Many comments requested flexibility
in th e design of the form. The final
regulations allow some degree of flexi­
bility. Additional item s describing com­
mon local charges may be inserted in
blank spaces on th e form. The spacing
between lines may be increased for com­
puter printing, and the lender or settle­
m ent agent may add a firm nam e or
logotype to th e title block. Signature
lines may be added.
Numerous comments objected to the
number of subtotals which the proposed
form required. These have been largely
elim inated in the final version. The “dis­
bursem ents” column has also been
elim inated, since nearly all comments
which discussed it thought that it would
confuse consumers.
A large number of com m ents requested
that separate forms be provided for bor­
rower and seller. The form was rede­
signed so that separate summaries of the
borrower’s and seller’s transactions ap­
pear on page 1, but the inform ation on
page 2 m ust be provided to both bor­
rower and seller, as required by the Act.
The instructions permit the lender or
settlem ent agent to send a copy of the
form to the borrower with the seller’s
summary left blank, and sim ilarly to
send a copy to the seller with the bor­
rower’s summary left blank.
A large number of com m ents objected
to inclusion in the advance disclosure
of the liens and charges against the
seller’s land; these comments asserted
that such inform ation would not be
available until a title search was com­
pleted and payoff letters from existing
lenders were obtained, and that the
am ounts could not theretofore be esti­
m ated in any m eaningful way. The D e­
partm ent believes th a t this view is cor­
rect, and the final instructions to the
form perm it the portions dealing w ith
these m atters to be left blank when the
form is used for advance disclosure. This
means that in m ost cases the advance
disclosure will not indicate to the seller
the am ount of cash he can expect to
realize from the transaction. However,
the portions of the form summarizing
the buyer’s transaction m ust be com­
pleted when the form is used for advance
disclosure, thus indicating to the buyer
the am ount of cash he will need to com­
plete settlem ent.
The Departm ent has determined this
rule does not have significant im pact on
the environm ent and a finding of inap­
plicability has been prepared pursuant
to HUD Handbook 1390.1. A copy of this
finding is available during regular busi­
ness hours for public inspection in the
Office of the Rules Docket Clerk, Office
of General Counsel, Room 10245, De­
partm ent of Housing and Urban Devel­
opment, 451 7th Street SW., W ashing­
ton, D.C. 20410.
Accordingly, Subtitle A of T itle 24 is
amended by adopting a new Part 82—
Real Estate Settlem ent Procedures to
read as follows:

PART 82— REAL ESTATE SETTLEMENT
PROCEDURES

Sec.
82.1
82.2
82.3

A u th o rity , scope a n d purpose.
D efinitions.
R eliance u p o n ru le, reg u latio n s or in ­
te rp re ta tio n by HUD of RESPA.
82.4
A pplicability.
82.5
In fo rm atio n booklet fo r persons a p ­
p lying for loans to p u rchase re si­
d e n tia l real property.
82.6
U niform D isc lo su re /S ettle m en t S ta te ­
m e n t Forin.
82.7
A dvance disclosure of se ttle m e n t costs
by lender.
82.8
U niform S e ttle m e n t S ta te m en t.
82.9
M ailing.
82.10 No fee.
82.11 R e la tio n to S ta te laws.
Au th ority : R eal E state S e ttle m e n t Proce­
d u res Act of 1974, P ub. L. 93-533 (12 U.S.C.
2601).
R e g u la tio n X
§ 8 2 .1

A u thority, sco p e and p u rp ose.

This part, which m ay be referred to
as R egulation X, comprises the regula­
tions issued by th e Secretary of Housing
and Urban Developm ent pursuant to the
Real E state Settlem ent Procedures Act
of 1974 (Pub. L. 93-533), 12 U.S.C. 2601,
herein “RESPA”. This part applies to
certain 1 to 4 fam ily mortgages, defined
as “Home M ortgages” in this part.
RESPA Section 4 (Uniform Settlem ent
Statem ent) authorizes and directs the
Secretary to prescribe a uniform settle­
m ent statem ent to be used in the settle­
m ent o f Home Mortgages. RESPA Sec­
tion 5 authorizes and directs the Secre­
tary to prescribe special inform ation
booklets to be provided by the Lender
to each person borrowing money to fi­
nance th e purchase of certain residential
real estate transactions so that he or she
m ay better understand the nature and
costs of real estate settlem ent services.
RESPA Section 6 authorizes and directs
the Secretary to prescribe the form and
im plem enting regulations by which every
Lender, w ith respect to a Home Mort­
gage subject to Section 6, shall disclose
in advance of settlem ent every charge
arising in connection with the settle­
ment. RESPA Section 12 prohibits im ­
position by a lender of a fee for or on
account of preparing and subm itting the
statem ents required by Sections 4 and
6 or by th e Truth in Lending Act, 15
U.S.C. 1601 et seq. RESPA section 18(a)
authorizes the Secretary to determine
w hether state laws w ith respect to settle­
m ent practices are inconsistent with any
provision of RESPA. Section 18(b) pro­
vides that no provision of RESPA or of
the laws of a state shall apply to any act
done or om itted in good faith in con­
form ity w ith any rule, regulation, or in ­
terpretation thereof by the Secretary.
§ 8 2 .2

D efin itio n s.

For purposes of this part, the follow­
ing definitions apply, unless the context
indicates otherwise.
(a)
“Assumption Approval” m eans the
approval by the Lender or his duly au­
thorized agent or representative of an
assumption of, or a sale subject to, a
Home Mortgage where such approval is

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, MAY 22, 1975

22450

RULES AND REGULATIONS

nection with the purchase of or transfer
of title to the mortgaged property;
(2) The loan is secured by a lien on
or other security interest in real estate,
including a fee simple, life estate, re­
mainder interest, or leasehold estate,
upon which there is located a structure,
including a mobile home owned or to be
owned by the borrower and covered or
to be covered by the mortgage, designed
principally for the occupancy of from
1 to 4 fam ilies or upon which such a
structure is to be constructed, or pur­
chased in the case of a mobile home, us­
ing part or all of the proceeds of the
loan, or the loan is secured by a lien
or other security interest covering a 1
to 4 fam ily residential condominium unit,
or the loan is secured by a pledge of
cooperative stock or interest correspond­
ing to a 1 to 4 fam ily residential coopera­
tive unit;
(3) The Mortgaged Property is located
in a State; and
(4) The loan is made by a Federal
Lender, or is made in whole or in part,
or insured, guaranteed, supplemented, or
assisted in any way, by the Secretary
or any other officer or agency of the
Federal Government, or is made in con­
nection with a housing or urban devel­
opment program administered by the
Secretary or other agency of the Federal
Government, or is eligible for purchase
by the Federal N ational Mortgage As­
sociation (FNM A), the Government Na­
tional Mortgage Association (GNM A), or
the Federal Home Loan Mortgage Cor­
poration (FHLMC). Note th a t GNMA’s
authority to purchase mortgages includes
broad authority under 12 U.S.C. 1720(a)
“to purchase such types, classes, or cate­
gories of home m ortgages” as the Presi­
dent shall determine to carry out the
purposes of 12 U.S.C. 301(b).
(f) “Lender” m eans, in th e case of a
new loan, the secured creditor or cred­
itors named as such in the debt obliga­
tion and document creating the lien or
other security interest, and in the case
of an Assumption Approval with respect
to a preexisting loan, the current owner
or owners of the Home Mortgage at the
tim e of the Assumption Approval.
(g) “Loan Application” m eans an oral
or w ritten application for a Home Mort­
gage or Assumption Approval received by
the Lender or his agent or representative
(f) T he te rm “c re d ito r” refers only to
creditors who reg u larly extend, o r arran g e or independent contractor originating
the Home Mortgage in the name of the
fo r th e ex tension of, c red it fo r w hich th e
p a y m e n t of a finance charge is required, Lender or servicing the Home Mortgage
w h eth er in c o n n ectio n w ith loans, sales of for the Lender. The date of Loan Appli­
p ro p erty o r services, o r otherw ise. T h e p ro ­ cation is the date of actual receipt.
visions of th is title apply to any su c h cred ­
(h) “Loan Commitment” means a
ito r, irrespective of h is or its s ta tu s as a promise by a Lender to a borrower, oral
n a tu ra l p erson o r an y type o f o rganization. or written, to make a Home M ortgage or
(e) “Home M ortgage” means a loan Assumption Approval, w ith respect to a
w hich is not made to finance an exem pt specified property, whether or not such
transaction under section 82.4(b) and promise is subject to any conditions and
which m eets all of the following four re­ whether or not the borrower is obligated
quirements:
to accept such Home Mortgage or As­
(1)
The proceeds of the loan are usedsumption Approval.
in whole or in part to finance the pur­
(i) “Mortgaged Property” means the
chase by the borrower, or other transfer real property covered by the Home Mort­
of title, of the mortgaged property or the gage, or the cooperative unit w ith re­
loan was previously made and the lender spect to which stock is pledged to secure
makes an assumption approval in con­ the Home Mortgage loan.

conditioned or based upon a change in
the interest rate or other terms and con­
ditions of the promissory note or docu­
m ent creating th e mortgage lien, or is
made in consideration of the payment of
a fee in excess of fifty dollars ($50) paid
to the Lender or his agent, representa­
tive or servicer.
(b) “D ate of Settlem ent” means, in
the case of a sale or transfer financed
by a new mortgage, th e date on which
the documents creating the mortgage
become effective as between th e borrower
and the Lender, and in the case of a pur­
chase of a property subject to an exist­
ing mortgage, whether or not the buyer
assumes personal liability, the date on
which title is transferred as between
seller and buyer not subject to revocation
by seller or buyer.
(c) “Days” are computed as follows:
All tim e periods in th is part are ex ­
pressed in days. Periods do not include
the day from w hich they are measured.
Where the last day on which an act or
event is perm itted to occur is a Saturday,
Sunday or Federal or State holiday, such
act or event may occur on the next suc­
ceeding day which is not a Saturday,
Sunday or Federal or State holiday.
Where a period is 7 days or more, it is
measured in calendar days. W here a pe­
riod is less than 7 days and not specified
as calendar days, it is measured in busi­
ness days, excluding Saturdays, Sundays
and Federal or State holidays.
(d) “Federal Lender” m eans: (1) A
lending institution, the deposits or ac­
counts of which are insured by th e Fed­
eral Savings and Loan Insurance Cor­
poration (FSLIC), th e Federal Deposit
Insurance Corporation (FDIC) or any
other agency of the Federal Government,
or (2) a lending institution which is reg­
ulated by the Federal Home Loan Bank
Board or any other agency of the Federal
Government, or (3) a “creditor,” as de­
fined in section 103(f) of the Consumer
Credit Protection Act (15 U.S.C. 1602
(f) ) , who makes or made new invest­
m ents in residential real estate loans ag­
gregating more than $1,000,000 in either
the calendar year in which the D ate of
Settlem ent of the Home M ortgage in
question occurs or the calendar year prior
thereto. Section 103(f) defines “creditor”
as follow s:

(j) “Person” means any individual,
corporation, partnership, trust, associa­
tion or other entity.
(k) “RESPA”. The Real E state S et­
tlem ent Procedures Act of 1974 (Pub. L.
93-533), 12 U.S.C. 2601, as amended.
(1)
“Secretary.” The Secretary of
Housing and Urban Development or any
official delegated the authority of the
Secretary w ith respect to RESPA.
(m) “S tate” means any State of the
United States, the D istrict of Columbia,
the Commonwealth of Puerto Rico, and
any territory or possession of the United
States.
§ 8 2 .3 R elia n ce upon ru le, r egu latio n or
in terp retation by HUD o f RESPA .
(a) Section 18(b) of RESPA provides:

i
'
1

.

No provision of th is A ct o r of th e law s of
any S ta te im posing an y lia b ility shall apply
to any a c t done o r o m itte d in good fa ith in
conform ity w ith an y ru le, re g u latio n , or in ­
te rp re ta tio n th ere o f by th e S ecretary, n o t­
w ith stan d in g t h a t a fte r su ch a c t or om ission
h a s occurred, su ch ru le, re g u latio n , o r in ­
te rp re ta tio n is am ended, rescinded, or de­
term in ed by Judicial or o th e r a u th o rity to be
Invalid fo r an y reason.

(b) For purposes of section 18(b), only
the following constitute a “rule, regula­
tion, or interpretation thereof by the
Secretary” :
(1) The Uniform D isclosure/Settle­
m ent Statem ent, HUD Form J, and HUD
instructions set forth in Appendix A, but
not including page 3 of the form and the
Federal Reserve Board instructions
thereto, set forth in Appendix B;
(2) All other provisions and Appendices contained in this part, but not in ­
eluding any document referred to in this
part except to the extent such document
is set forth in th is part; and
(3) Each formal legal opinion regarding RESPA, designated as a “RESPA
Legal Opinion,” numbered and dated, by
the General Counsel of the Department,
(c) A “rule, regulation, or interpreta­
tion thereof by th e Secretary” for pur­
poses of RESPA section 18(b) shall not
include the Special Inform ation Booklet prescribed by the Secretary or any
other statem ent or issuance, whether
oral or w ritten, by an officer or representative of HUD, letter or memorandum
by th e Secretary, General Counsel, any
Assistant Secretary or other officer or
employee of HUD, preamble to a regulation or other issuance of HUD, report to
Congress, pleading, affidavit or other document in litigation, pamphlet, handbook,
guide, telegraphic communication, expla­
nation, instructions to forms, speech or
other m aterial of any nature which is
not specifically included in paragraph
(b) of this section.
§ 8 2 .4

j
j
;

;
1
,
i

i
1
1
j
j
|
j

(
|
|
)

A p plicab ility.

(a)
T r a n s a c t i o n s c o v e r e d . This part
applies to loans which constitute Home
Mortgages as defined in § 82.2(e). As de­
fined therein, Home Mortgage does not
include a home improvement loan or
other loan secured by a lien on a 1 to 4
)
fam ily residential property where the
j
proceeds of the loan are not used to
finance the purchase or transfer of the
property. Nor does Home Mortgage in-

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, MAY 22, 1975

22451

RULES AND REGULATIONS
elude refinancing of a mortgage loan
secured by a lien on a 1 to 4 fam ily
residential property where there is no
transfer of title.
(b) E x e m p t t r a n s a c t i o n s . This part
shall not apply to purchases of property
for resale in the ordinary course of busi­
ness.
(c) C o m m e n c e m e n t o f a p p l i c a b i l i t y —
(!) I n f o r m a t i o n b o o k l e t . The Special In­
form ation Booklet m ust be distributed
with respect to every Loan Application
received on or after June 20, 1975.
(2) A d v a n c e d is c l o s u r e . A fter June 20,
1975, advance disclosure, as required by
§ 82.7 of this Part, m ust be provided with
respect to every Home Mortgage except
a Home Mortgage (i) w hich is made pur­
suant to a Loan Commitment evidenced
by a letter or written agreem ent signed
by the Lender prior to June 20,1975, and
(ii) as to which the D ate of Settlem ent
occurs on or before October 20, 1975.
Where advance disclosure is required, it
may be made prior to June 20, 1975.
(3) S e t t l e m e n t s t a t e m e n t . The U ni­
form D isclosure/Settlem ent Statem ent
shall be used as the settlem ent statem ent
w ith respect to every Home Mortgage
subject to the advance disclosure re­
quirements pursuant to paragraph (c)
(2) of this section.
§ 8 2 .5
In fo rm atio n b o o k let fo r p ersons
a p p ly in g fo r lo a n s to pu rchase resi­
d en tia l real property.

(a) L e n d e r
b o o k l e t . Every

to

p r o v id e

in f o r m a tio n

lender shall provide a copy
of the Special Inform ation Booklet cur­
rently prescribed by the Secretary to
every person who makes a loan applica­
tion. Where more than one individual
makes a loan application, the lender is
required to supply a copy of the Special
Inform ation Booklet to at least one of
the individuals applying. The lender
shall supply the Special Inform ation
Booklet by delivering it to or placing it
in the mail to the applicant not later
than the third business day of the lender
following the day on which th e applica­
tion is received.
(b) P r i n t i n g a n d d u p l i c a t i o n . The Spe­
cial Inform ation Booklet may be ob­
tained from the Superintendent of Docu­
m ents, U.S. Government Printing Office,
W ashington, D.C. 20402. The Secretary
may from tim e to tim e revise the Spe­
cial Inform ation Booklet. The Special
Inform ation Booklet m ay be printed or
reproduced in any form, provided that
no change is made, other than as per­
m itted under paragraph (c) of th is sec- .
tion. The Special Inform ation Booklet
m ay not be made a part of a larger docu­
m ent for purposes of distribution under
RESPA and this section. Any color, size
and quality of paper, type of print, and
m ethod of reproduction may be used so
long as the booklet is clearly legible and
easily readable.
(c) P e r m is s i b le c h a n g e s . No change to,
deletion from or addition to the Fore­
word and text of the Special Inform ation
Booklet currently prescribed by the Sec­
retary shall be m ade other than those
specified below or any others approved
in writing by the Secretary:

(1) The cover of the booklet m ay be
in any form and may contain any draw­
ings, pictures, or artwork, provided that
the words “settlem ent costs” are used in
the title. Names, addresses and tele­
phone numbers of the lender or others
and sim ilar inform ation may appear on
the cover, but no discussion of the m at­
ters covered in the booklet shall appear.
(2) The Special Inform ation Booklet
may be translated into other languages.
(3) The wording may be deleted which
precedes the foreword, authorizing the
reprinting of the booklet and referring
to sale by the Superintendent of Docu­
m ents, but not the first paragraph, re­
ferring to preparation of the booklet by
the Secretary.
(4) In the last sentence of the fore­
word, “a lending institution” may be
added after “local consumer affairs
agency.”
(5) In the “Advance disclosure” sec­
tion, the third sentence of the second
paragraph may be deleted.
(6) In the section, “2. Settlem ent a t­
torneys, escrow and closing agents,” the
second paragraph and first sentenbe of
the third paragraph may be deleted.
(7) In section B6, in th e paragraph
entitled “c. Settlem ent Agent,” the words
“and location” may be deleted from the
last sentence.
§ 82.6 U niform
D isclosure/Settlem ent
Statement Form.

(a) U s e o f F o r m . HUD Form 1, “D is­
closure/Settlem ent Statem ent,” pages 1
and 2 of which, w ith instructions, are
set forth in Appendix A to this part, and
the third page of which, with instruc­
tions, is set forth in Appendix B to this
part, shall be used as the advance dis­
closure statem ent under RESPA section
6 and § 82.7 of this Part, and as the
settlem ent statem ent under RESPA sec­
tion 4 and § 82.8 of this Part.
(b) P r i n t i n g a n d d u p l i c a t i o n o f F o r m .
The
Uniform
D isclosure/Settlem ent
Statem ent Form may be reproduced by
lenders or others. Lenders are required
to use the form, with the first two pages
as prescribed by th e Secretary and the
third page as prescribed by the Federal
Reserve Board. Only the following per­
missible changes and insertions m ay be
made:
(1) In Block A, th e lender or other
company reproducing the form may in ­
sert its business nam e and/or logotype
and may rearrange, but not delete, the
other inform ation which appears in
Block A.
(2) In Block F, the name, address ahd
other inform ation regarding the lender
may be printed, and a space or spaces
may be printed for lender’s loan number
or sim ilar inform ation.
(3) The form m ay be printed sepa­
rately to be used only as an advance
disclosure form or to be used only as a
form for settlem ent, in w hich-cases the
paragraph entitled “STATEMENT OF
ACTUAL COSTS” and item s 500 through
603 may be deleted from the form used
for advance disclosure, and thp para­
graph entitled “ADVANCE DISCLO­

SURE OF COSTS” may be deleted from
the form used for settlem ent.
(4) A statem ent may be printed at the
end of the paragraph “ADVANCE D IS­
CLOSURE OF COSTS”, in any style or
type of print, that advance disclosure
of prorations of taxes and assessm ents
is based upon the assumption that taxes
and assessm ents are not delinquent. Such
statem ent if printed on the form will
then be stricken where advance disclo­
sure is not based upon such assumption.
See § 82.7(k).
(5) No changes in the size or type
style of print or the layout of the first
two pages of the form shall be ni'ade,
except as follows: (A) The layout of
the form may only be reset in type if
such type style is approximately the
same size and appearance, is easily read­
able, and the entire form layout is iden­
tical to the form as prescribed by HUD;
and (B) where necessary to accommo­
date computer equipment, the first two
pages of the form may be printed in a
larger size of print and different type
style and the distance between lines may
be increased, but not decreased, but there
shall be no other change in the layout
and placem ent of inform ation on the
form. As to the third page, see R egula­
tion Z, 12 CFR Part 226, and the Federal
Reserve Board instructions in Appen­
dix B.
(6) In the first two pages, item s listed
in the form not used locally or not used
in connection w ith mortgages by the
lender m ay be lined out in a m anner so
that they may still be read.
(7) In the first two pages, charges not
listed which are made locally m ay be in ­
serted in blank spaces in any style or
type of print of sim ilar size, but which is
different from the style and type of print
used in the balance of the form (to in ­
dicate item s not listed nationw ide).
(8) Signature lines and customary lo­
cal recitals prior to signature lines may
be added at the end of the second page
or at th e end of the third page.
(9) Additional blank space m ay be
added above and/or below each page and
the form may be printed on rolls, which
may have sprocket holes e.g. for com­
puter purposes. The pages m ay be printed
on separate sheets or placed on the front
and back of a single sheet, or one above
the other on a single, continuous sheet.
(10) The form may be printed on light
shades of tinted paper and may be
printed in one or more colors of clearly
legible inks.
(11) The form may be printed in
m ulti-copy tear-out sets. Such sets or any
other method for m aking copies may
delete Block J, lines 100 through 303,
from the seller’s copy and Block K, lines
400 through 603, from the Borrower’s
copy.
(12) The form may be translated into
any other language w ith the approval of
the Secretary, but item s of the Truth in
Lending Statem ent required by law to be
stated in English m ust be so stated.
(13) Any other deviation in pages 1
and 2 of the form is only permissible
upon receipt of written approval of the
Secretary. Any other deviation in the

FEDERAL REGISTER, VOL. 40 , NO. 100— THURSDAY, MAY 22, 1975

RULES AND REGULATIONS

22452

Where as of the date of W a i v e s t o R e d u c e P e r i o d B e t w e e n A d v a n c e
D is c l o s u r e a n d S e t t l e m e n t
loan commitment, the date of settlem ent
is anticipated by the lender, based upon Id e n tifica tio n of T ran sac tio n :
inform ation given to the lender, to occur B o rro w e r(s): _______;______________________
more than 60 calendar days after the S e lle r(s ): ________________________________
date of loan - com m itment, the lender P ro p erty : ________________________________
may in its discretion m ail or deliver the Loan a m o u n t:____________________________
advance disclosure statem ent subsequent L e n d e r : __________________________________
to the tim e prescribed in paragraph (b ), D ate of s e ttle m e n t:_______________ ________
but not later than 60 days prior to the
I hereby acknow ledge an d affirm t h a t I
anticipated date of settlem ent. There­ know t h a t th e R eal E sta te S e ttle m e n t Proce­
after, if the lender is advised th at the d u res A ct of 1974 re q u ire s th e L ender to m ail
date of settlem ent is expected to occur to m e a n advance item ized disclosure in w rit­
of each ch arg e a risin g in c o n n ectio n w ith
still later, the lender may in its dis­ ing
th is s e ttle m e n t n o t la te r th a n 15 calen d ar
cretion m ail or deliver the advance dis­ days p rio r to th e d a te of se ttle m e n t, or de­
closure statem ent at any tim e n ot later liver su c h disclosure to m e n o t la te r th a n 12
than 60 calendar days prior to such re­ days p rio r to th e d a te of se ttle m e n t. I f u r ­
vised anticipated date of settlem ent. If th e r u n d e rsta n d t h a t if th e len d er falls to
at any tim e subsequent to the date of provide th e re q u ire d disclosure I m ay recover
loan com m itm ent the lender is advised from i t $500 o r a c tu a l dam ages, w hichever
that the date of settlem ent is anticipated is g reater, p lu s c o u rt costs a n d a reasonable
rn e y ’s fee as d eterm in ed by th e court.
earlier than previously anticipated, lend­ a tto
N o tw ith stan d in g th e above, I h ereby waive
er shall mail or deliver the advance dis­ th e rig h t to receive su c h disclosure 12 days
closure statem ent on or before 60 days or have i t m ailed 15 days p rio r to se ttle m e n t
prior to such revised anticipated date of a n d I fu rth e r c ertify th a t:
(1) A pplication fo r th is lo an was m ade
settlem ent or, if such revised date is
w ithin 67 days of the date lender is ad­ n o t m ore th a n 21 calen d ar days p rio r to s e t­
tle
m e n t d a te a n d I have consented to se ttle ­
vised of the revised anticipated date of
settlem ent, lender shall m ail or deliver m e n t o n th a t d ate; a n d
(2) I received th e advance disclosure of
the advance disclosure statem ent not s e ttle
m e n t costs a t le a st 3 days (excluding
later than 7 calendar days after being S aturdays, S undays a n d holidays) p rio r to
advised of such revised date of settle­ th e d a te of se ttle m e n t.
m ent. Nothing in this subsection (c)
(3) I u n d e rsta n d t h a t I am n o t req u ired
shall alter or affect the minimum periods to execute th is w aiver a n d m ay, in stead , d e­
between disclosure and settlem ent set term in e n o t to w aive a n d to re q u ire th e a d ­
§ 82.7 Advance disclosure o f settlem ent forth in the third sentence of paragraph vance disclosure o f se ttle m e n t costs to be
costs by lender.
to m e 12 days before se ttle m e n t o r
(b) of this section. See paragraph (p) delivered
m ailed to m e 15 days before se ttle m e n t; a n d
(a) L e n d e r t o p r o v i d e . As required by of this section regarding Truth in Lend­
(4) I u n d e rsta n d t h a t if I sig n th is w aiver
RESPA section 6, each lender m aking a ing disclosure.
in advance of th e d a te o f se ttle m e n t, I m ay
home mortgage or assumption approval
E xam ple 2. L oan C om m itm ent is m ade revoke th is w aiver a t an y tim e p rio r to th e
of a home m ortgage shall make or cause Ju ly 1 a n d s e ttle m e n t is a n tic ip a te d to occur d a te of se ttle m e n t.
to be made advance disclosure of settle­ O ctober 15. L ender m ay m all o r deliver a d ­
S ig n a tu re (s) D ate
m ent costs on HUD Form 1 in accordance vance disclosure a t a n y tim e o n o r before
A ugust 14 (60 days before, a n d n o t including,
w ith this section.
(e) M o r e t h a n o n e l e n d e r . Where two
ctober 15). As of A ugust 1, L ender h a s n o t
(b) T i m i n g o f a d v a n c e d is c l o s u r e . Ex­ O
y e t m ade advance disclosure a n d is advised
cept as provided in paragraphs (c) and t h a t s e ttle m e n t is a n tic ip a te d Novem ber 15. or more home mortgages are made w ith
(d) of this section, the lender shall place L ender m ay m ail or deliver advance d is­ respect to the same sale or transfer of
in th e m ail to or deliver to the borrower closure sta te m e n t an y tim e o n or before the mortgaged property, each lender may
and the seller the advance disclosure S eptem ber 14. O n S eptem ber 1, t e n d e r Is a d ­ independently satisfy the advance dis­
statem ent (on HUD Form 1) at any vised th a t se ttle m e n t Is a n tic ip a te d to occur closure requirements, or they may jointly
tim e not later than 7 calendar days N ovem ber 1. L ender m u st m ail o r deliver satisfy the advance disclosure require­
disclosure sta te m e n t o n o r before m ents. In either case, each lender shall
after the date of loan commitment. Ad­ advance
S eptem ber 8.
be fully responsible to the borrower and
vance disclosure may be made prior to
seller to make the required disclosure.
loan commitment. Settlem ent shall not
(d)
W a iv e r o f m in im u m p e r io d b e ­
(f) G o o d f a i t h e s t i m a t e s . W here the
occur less than 15 calendar days after t w e e n a d v a n c e d is c l o s u r e a n d s e t t l e m e n t .
such m ailing or 12 calendar days after The minimum period between advance exact am ount of a charge required to be
such delivery. Where advance disclosure disclosure and settlem ent provided in stated in the advance disclosure state­
statem ents to different parties are m ailed paragraph (b) m ay be reduced to 3 days m ent is not known, the lender m ay state
or delivered on different dates, the m ini­ from actual receipt of the advance dis­ a good faith estim ate made by th e lender,
mum period to settlem ent provided above closure statem ent by the borrower and or an estim ate obtained by the lender
shall be the latest date required w ith re­ the seller where settlem ent is held not from a provider of settlem ent services
spect to any one disclosure statem ent. later than 21 days after the date the loan w hich the lender reasonably believes is
See paragraph (p) of th is section regard­ application was made. Such reduction a good faith estim ate. Each estim ate
ing Truth in Lending disclosure.
shall only be made where a copy of the m ust be stated as a specific figure, and
not as a range of possible figures. The
Exam ple 1. L oan C om m itm ent is m ade following waiver form is voluntarily advance disclosure statem ent shall state
Ju ly 2. S e ttle m e n t is a n tic ip a te d to occur executed by each borrower and seller an “ (e )” after each figure which is an
w ith in 60 days. A dvance disclosure s ta te ­
who has not been m ailed or delivered the
estim ate.
m e n t is delivered to one seller o n Ju ly 5, advance disclosure statem ent on or be­
(g) C h a r g e s t o b e d is c lo s e d . The ad­
m ailed to a second seller on Ju ly 7 and fore the tim e lim it specified in paragraph
m ailed to borrow er on Ju ly 9. S e ttle m e n t m ay
(b) of this section and is attached to vance disclosure statem ent shall state the
n o t be held p rio r to Ju ly 24 (15 days from ,
am ount or estim ated amount of the
a n d n o t in clu d in g , Ju ly 9 ). A dvance d is­ the settlem ent statem ent. Such waiver charges to be imposed upon the borrower
does
not
waive
any
applicable
right
of
closure is tim ely because i t is m ade n o t
and the seller shall set forth in th e U ni­
la te r th a n Ju ly 9 (7 days from , a n d n o t in ­ rescission under the Truth in Lending form D isclosure/Settlem ent Statem ent
cluding, Ju ly 2 ).
Act; see R egulation Z, 12 CFR Part 226, (HUD Form 1) lines 700 through 1400
(c) T i m i n g w h e r e s e t t l e m e n t i s a n ­ for requirements applicable to waiver of and all sim ilar charges to be paid by bor­
rower and seller which are not listed in
tic ip a t e d m o r e t h a n 60 d a y s a f t e r lo a n
right of rescission.

page 3 Truth in Lending disclosure must
be in accordance w ith requirements of
the Board of Governors of the Federal
Reserve System. See Regulation Z, 12
CFR 226.102 and form instructions in
Appendix B to this Part. A request to the
Secretary for approval m ust be submitted
in writing to the A ssistant Secretary
for Housing Production and Mortgage
Credit—Federal Housing Commissioner,
Room 6100, 451.7th Street, SW„ W ash­
ington, D.C. 20410, stating the reasons
why the applicant believes such devia­
tion is needed. Prior to receiving such
approval, the prescribed form m ust be
used.
(c) H U D - p r e s c r i b e d a d d i t i o n s o f i t e m s
t o f o r m . HUD reserves the right to direct
the order and the m anner in which addi­
tional item s are added to the first two
pages of the form or in which any other
changes are made in the first two pages
of the form for any locality, jurisdiction
or area.
(d) A d d i t i o n a l s h e e t . W here there is
an unusually large number of insertions
for which blank spaces in the first two
pages of the form are not sufficient, an
additional sheet for such item s may be
added to the form and referenced a t the
appropriate place or places in the form.
Such additional sheets may be printed.
The reverse side of the form m ay be used
instead of an additional sheet.

c o m m it m e n t.

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, MAY 22, 1975

RULES AND REGULATIONS
said lines 700 through 1400, except as
provided in paragraph (h) of this section
regarding hazard insurance, paragraph
(i) of th is section regarding attorney’s
fees, and paragraph (j) of this section
regarding inspection charges and other
charges. Blocks J and K shall be com ­
pleted; adjustm ents may be made in ac­
cordance with paragraph (k) of this sec­
tion. At the lender’s option, lender may
delete Block J from the disclosure to the
seller. A t the lender’s option, lender may
om it Block K from the disclosure state­
m ent to the borrower.
(h) E x c e p t i o n t o a d v a n c e d is c l o s u r e
o f h a z a r d i n s u r a n c e c h a r g e s . The charges
for hazard insurance binder or policy
covering the mortgaged property are not
required to be stated in the advance dis­
closure statem ent where the borrower
independently obtains his own hazard
insurance binder or policy, whether or
not the lender requires such binder or
policy to be obtained for settlem ent, pro­
vided that the binder or policy has not
been obtained by, and the carrier or in ­
surance broker or agent has not been se­
lected for the borrower by, any of the
following persons: The lender; an agent
or representative of the lender or inde­
pendent contractor originating the home
mortgage in the nam e of th e lender; the
real estate agent or broker; or the per­
son selected to conduct the settlem ent.
(i) E x c e p t i o n t o a d v a n c e d is c l o s u r e o f
a t t o r n e y ’ s fe e s . Pees or estim ated fees to
be paid by borrower to borrower’s attor­
ney or by seller to seller’s attorney are
not required to be stated in the advance
disclosure statem ent where such attor­
ney is not retained to perform the title
search or other services required by the
lender and the borrower or seller, as the
case m ay be, independently elects to be
represented by an attorney and inde­
pendently selects th e particular attorney.
Attorney’s fees or estim ates thereof are,
however, required to be stated in the
following cases:
(1) Pees to be paid by th e borrower
for an attorney representing the lender,
the seller or any other person;
(2) Fees to be paid by the seller for
an attorney representing the lender, the
borrower or any other person;
(3) Fees to be paid by the borrower
or the seller for an attorney represent­
ing the borrower or seller, respectively,
if the borrower or seller is required by
the lender or his agent or representative
or independent contractor originating
the home m ortgage in the nam e of the
lender to be represented by counsel;
(4) Fees to be paid by the borrower or
the seller for an attorney representing
the borrower or seller, respectively, if
the lender or his agent or representative
or independent contractor originating
the home mortgage in the nam e of the
lender selects the attorney. For purposes
of this paragraph (i) (4 ), the lender or
such other person is not considered to
select the attorney if he merely recom­
mends a list of at least three attorneys
and does not require the borrower to
select an attorney from such list.

22453

lished by the third sentence of para­
graph (b).
(2) A lender shall not be liable under
Charges or estim ates thereof for services RESPA for a violation which was not in ­
not required by the lender or his agent tentional and resulted from a bona fide
or representative or independent con­ error notw ithstanding the m aintenance
tractor originating the home mortgage of procedures adopted to avoid such an
for the lender are not required to be error.
(3) In order to show actual damages
stated in the advance disclosure sta te­
m ent where the borrower or seller inde­ under RESPA, the borrower(s) or the
pendently elects to obtain such services seller (s) seeking damages above $500
and independently selects the provider of must establish on the particular facts of
the case th at had the required disclosure
such services.
(k) D is c l o s u r e o f a d j u s t m e n t s f o r t a x e s been made, the borrower (s) or the sell­
er (s) would have obtained settlem ent
a n d a s s e s s m e n ts . Lender may make the
disclosure of adjustm ents for taxes and services costing at least $500 less than
assessm ents based upon the assumption those he or she actually paid.
(4) Loss based upon seller’s claimed
th at no taxes and assessm ents are delin­
quent, in lieu of determ ining from the loss of a sale, borrower’s claim th at he
appropriate records whether delinquen­ was unable to purchase due to lender’s
cies exist. W here lender irlakes disclosure failure to make proper'disclosure, bor­
based upon such assumption, lender shall rower’s claim that he would have pur­
place in Block C a statem ent that ad­ chased a different property, or damages
vance disclosure of prorations of taxes other than described in paragraph (M)
and assessm ents is based upon the as­ (3) of this section may not be the basis
sumption that taxes and assessm ents are for a claim under RESPA for actual
not delinquent. See § 82.6(b) (4) regard­ damages in excess of $500.
(o)
N o F e e f o r P r e p a r a tio n o f A d v a n c e
ing the printing of such a statem ent.
.
(1) S i n g l e d is c l o s u r e . W here subsequent D is c l o s u r e S t a t e m e n t . See § 82.10.
(p) T r u t h i n L e n d i n g d is c lo s u r e . The
to m ailing or delivering the advance dis­
closure statem ent, changes in anticipated third page of the Uniform D isclosure/
charges come to the attention of the Settlem ent Statem ent, Appendix B to
lender no additional or revised advance this part, setting forth the Truth in
disclosure statem ent is required to be Lending disclosure, shall be com pleted
provided. The lender may in its discre­ and provided in accordance w ith the
tion, but is not required to, provide up­ Truth in Lending Act, Regulation Z of
dated or corrected am ounts to a party the Federal Reserve Board, 12 CFR Part
tiie lender understands will pay the 226, and any other Federal Reserve
charges in question or all parties by let­ Board requirements. Where R egulation
Z establishes a tim e lim it for the making
ter or otherwise.
(m ) R e c o r d - k e e p i n g . Lender shall re­ of such Truth in Lending disclosure
tain a copy of the advance disclosure which is earlier than the applicable time
statem ent required to be prepared pur­ lim it under paragraphs (b ), (c) and (d)
suant to RESPA section 6 for 2 years, ex­ of this section for the m aking of ad­
cept th at in the event lender disposes of vance disclosure, the Truth in Lending
its interest in the Home Mortgage and disclosure m ust be m ade at the tim e re­
does not service the hom e mortgage, quired by R egulation Z. In such cases,
lender m ay permit its copy of the ad­ the first two pages of the Uniform D is­
vance disclosure statem ent to be deliv­ closure/Settlem ent Statem ent, HUD
ered to the owner or servicer of the home Form 1, may be m ailed or delivered sub­
mortgage as part of the transfer of the sequently, but w ithin th e applicable tim e
loan file. A copy of the advance disclo­ lim its established in this part, and the
sure statem ent m ay be required to be third page Truth in Lending disclosure
subm itted to the Secretary and/or to is not required to be given a second tim e
other Federal agencies. Nothing in this when pages 1 and 2 are m ailed or
Part alters, amends or in any way re­ delivered.
duces the separate record keeping re­ § 8 2.8 Uniform Settlem ent Statement.
quirements of Regulation Z of the Fed­
(a) U s e o f H U D F o r m 1 . As required
eral Reserve Board. See 12 CFR 226.6 (i).
(n) D a m a g e s . As provided in RESPA by RESPA section 4, th e Uniform S et­
section 6(b ), a lender which fails to tlem ent/D isclosure Statem ent, HUD
provide the prospective borrower(s) or Form 1, shall be used as the settlem ent
seller(s) with the required advance dis­ statem ent for every Home Mortgage set­
closure shall be liable to such borrow­ tlem ent transaction involving a purchase
er ^ ) or to such seller(s), as the case or transfer of a mortgaged property for
may be, in an am ount equal to actual every home mortgage settlem ent pur­
damages or $500 to all borrowers and suant to an assumption approval.
(b) C h a r g e s t o b e s t a t e d . The Uniform
$500 to all sellers, whichever is greater,
and in the event a court action is filed D isclosure/Settlem ent Statem ent, HUD
and judgment is obtained against the Form 1, shall be completed to item ize
lender, court costs and a reasonable a t­ all charges imposed upon the borrower
torney’s fee as determined by the court, and the seller in connection with the
provided that: ( 1 ) A lender shall not be settlem ent, other than charges exempted
liable under RESPA for m ailing or de­ from advance disclosure under § 82.7
livering the disclosure statem ent later (h ), (i) and (j) and which borrower or
than the tim e lim its established in this seller contract to pay for separately out­
section, if w ithin the tim e lim its estab­ side of the settlem ent. The person pre(j) E x c e p t i o n t o a d v a n c e d i s c l o s u r e f o r
c h a r g e s f o r c e r t a i n o t h e r s e r v ic e s i n d e ­
p e n d e n t l y p r o c u r e d b y b o r r o w e r o r s e ll e r .

FEDERAL REGISTER, V O L 4 0 , NO. 100— THURSDAY, MAY 22, 1975

22454

RULES AND REGULATIONS

paring the settlem ent statem ent is not
required to supply the inform ation in
Block J in the copy supplied to th e
seller, nor to supply the inform ation in
Block K to the borrower.
(c) D e l i v e r y . The settlem ent statem ent
shall be delivered or m ailed to th e bor­
rower and the seller on th e date of settle­
m ent or as soon thereafter as practicable,
and in any case not later than 3 days
after the date o f settlem ent.
(d) R e c o r d k e e p i n g . Lender shall re­
tain a copy of each settlem ent statem ent
required to be prepared pursuant to
RESPA section 4 for 2 years, except that
in the event lender disposes of its inter­
est in the home m ortgage and does not
service th e home mortgage, lender may
perm it its copy of the settlem ent state­
m ent to be delivered to th e owner or serv­
icer of th e hom e m ortgage as part of the
transfer of the loan file. N othing in this
part alters, amends or in any way re­
duces th e separate recordkeeping re­
quirements of Regulation Z of th e Fed­
eral Reserve Board. See 12 CFR 226.6(1).
A copy of the settlem ent statem ent may
be required to be subm itted to the Secre­
tary an d/or other Federal agencies.
§ 8 2 .9

a . T Y P E O F LOAN,

U.S. DEPARTMENT of housing and urban development
! • { " 5 FH A

A **,« V *

BISCLOSUP.E'SETTLEMEMT STATEMEHT
It

f/ir*

2m\y

S

7 ; r.f in £ A c t nppti## to th is transaction, n Truth-in-Len dIn£ * • M° B T O .
:s
p u£v j o f r/if?* form._________________________________

FMHA

3 . 1 7 3 CONV* UNINS*

COWV. INS.

F I L S N U M BgF t

No fee.

Relation to State laws.

RESPA section 18(a) provides:
T h is A ct does n o t a n n u l, a lte r, or affect, or
exem pt a n y p erson su b je ct to th e provisions
of th is Act from com plying w ith , th e law s
of an y S ta te w ith resp ect to se ttle m e n t p ra c ­
tices, except to th e e x te n t t h a t those law s
are in c o n siste n t w ith a n y provision of th is
Act, a n d th e n only to th e e x te n t o f th e in ­
consistency, T he S ecretary is a u th o rized to
d e te rm in e w h eth er su c h inconsistencies exist.
T he S ecretary m ay n o t d e term in e th a t an y
S ta te law is in c o n siste n t w ith an y provision

______
7. L O A N N U M B S il

in s. c a s e n o .

C. N075: T h is'to rr, is •flu s h e d to yr.u prior to settlement to give you information about your settlement costs;, and again after
settlem ent to sIio*** th«* j.'-tuiit costa; you have paid. The present copy of the form Is:
' * ADVANCE blSCLCb'URf. Or COSTS, Soms items are estimated, and are marked " (e)*'. Some amounts may change if
inr*.
is hv!d cm a date other than the d a te estimated below. T h e preparer o f th is form Is c o t responsible for errors
or chiiR£*?s m amount!* furnished by others*
STATEMENT OF ACTUAL COSTS. Amounts paid to and by the settlem ent fluent are shown. Items marked ’fy -t/.c ./*
ttv.y .».i 1 piitsiJo the closing: they are shown here for inforantfonal oum oses and am not itighidggf fn total?,
BORROWER

H# SETTLEMENT ACENT

LO C A TIO N

LOAN COMMITMENT

As provided in RESPA section 12, no
fee shall be imposed or charge made
upon any other person, as a part of set­
tlem ent costs or otherwise, by a lender
in connection with or on account of th e
preparation and distribution required by
RESPA of the statem ent or statem ents
required by RESPA section 4 (Settlem ent
S tatem en t), RESPA section 6 (Advance
Disclosure) or by the Truth in Lending
Act.
§ 8 2 .1 1

C arla H . H il l s ,
S e c r e ta r y o f H o u s in g a n d U f b a n
D e v e lo p m e n t.

A determ ination by th e Secretary that
such an inconsistency exists shall be
made, after consultation w ith appropri­

M ailing.

The provisions of th is part requiring ox
perm itting m ailing of advance disclosure
statem ents, Special Inform ation Book­
lets or settlem ent statem ents shall be
deemed to be satisfied by placing the
document in the m ail (whether or not
received by th e addressee) addressed to
the address stated in the loan applica­
tion or in other inform ation submitted
to or obtained by lender at the tim e of
loan application, or subm itted to or ob­
tained by the person conducting the
settlem ent, except that a revised address
shall be used where the lender or such
other person has been expressly informed
in writing of a change of address.
§ 8 2.1 0

ate Federal agencies, by publication of a
notice in the F ederal R e g is t e r .
E f f e c t i v e d a t e . These regulations are
effective as of June 20,1975.

of th is A ct if th e S ecretary d eterm in es th a t
su c h law gives g re ater p ro tec tio n to th e con­
sum er. I n m ak in g th e se d e te rm in a tio n s th e
S ecretary sh all c o n su lt w ith th e a p p ro p ri­
a te F ederal agencies.

A D VA N CE D IS CLO SU RE
date

settlem ent

F I . A C E O f? S E T T L E M E N T

o r prorations if

d iff er e n t from s ettle
ment

■

K. SUMMARY OF SELLER'S TRANSACTION

J. SUMMARY OF BORROWER'S TRANSACTION

400. CROSS AMOUNT DUE TO SELLER:
401. Contract sales price
402. Personal property
403.
404.

ICO. CROSS AMOUNT OUE FROM BORROWER:
101. Contract sales price
102. Personal property
103. Settlement charges Is borrower
.. t tffOtt lln1! ttQO. Srrtlan L)
1C4.
:t05.

405. City/town taxes
406. County taxes
407. Assessments
408.
40?.
410.
411.

to
to
to
to
to
to
to

200. AMOUNTS PAID BY OR IN BEHALF OF BORROWER:

503. Settlement charges to seller
ffront Itrtti 1400. Section f.J
504. Existing toan(s) taken subject to
505.
SOS.
507.
503.
50?.

Credits lo borrower for items unpaid by seller:
206. City/town taxes
to
207. County taxes
to
203. Assessments
to
. 20?.
*o
.210.
‘
to
"
..S I’ .
to
2!.’. •
" ■ ' " —“ t o ..........................
jj ,. TOTAL AMOUNTS PAID BY Oil IN BEHALF O.P
*
80S'!0VfiR

510. Cily/town taxes
511. County taxes
512. Assessments
513.
514.
515.

PAYABLE TO/ BORROWER:

to
to
to
to
to
to

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

520. TOTAL REDUCTIONS IN AMOUNT DUE TO SELLER:

331. Grass amount due frora borrower
■ f w i ifni* 120)

” ; REqUIREO f r o m ; OR

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

Credits to borrower for items unpaid by seller:

SSC. c v n AT SETTLEMENT REQUIRED FROM ORPAYABLE
.TO SORROWER,

cash :"

■

NOTE: T he following 500 and 600 se rie s se ctio n s aro not
required lo b e completed when th is form is u sed for advance
disclosure ot settlem ent c o sts prior lb settlem ent.
500. REDUCTIONS IN AMOUNT DUE TO SELLER:
501. Poyolf ot first mortgoge loan
502. Poyolf of second mortgage loan

231. Deposit or earnest money
202. Principal amount of new loan(s)
203. Existing loan(s) taken subject to
204.
205.
.
'

W3.

to
to
to
to
to
to
to

420. CROSS AMOUNT DUE TO SELLER

120. CROSS AMOUHT DUE FROM BORROWER:

)J2. Lets oawunts paid by or in behalf of borrower
’
{ i-m fa e 'J O f

'

Adjustments for items paid by seller in advance:

Adjustments for items paid by seller in odvoncc:
106.,/ City/town taxes
WA County taxes
108. Assessments
109.
110.
111.
112.

­

<

)

600. CASH TO SELLER FROM SETTLEMENT:
601. Gross amount due to seller
I from line 4201
602. Less lotal reductions in amount due lo
seller {Frnm tinr ?.'20.

(

)

603. CASH TO SELLER FROM SETTLEMENT

FEDERAL REGISTER, V O L 4 0 , NO. 100— THURSDAY, MAY 22, 1 9 7 5

M U a - i 15-75)

RULES AND REGULATIONS

L. SETTLEMENT CHARGES

700. SAL El'BROKER'S COMMISSION feo.«don,ric«

$

9

%

PAID FROM

PAID FROM

BORROWER’ S
FUNDS

SE L LE R’S
FUNDS

701. Total commission poid by seller
Division of commission os follows:
702. $

to

703. S

to

704.
800. ITEMS PAYABLE IN CONNECTION KITH LOAN.
801.
802.
803.
804.
805.
806.
807.
808.
809.
810.
811.

Loon Oriainotion fee
%
Loon Discount
%
Appraisal Fee to
Credit Report to
^
Lender's inspection fee
*
MortgoQc Insurance application fee to
Assumption/refinancing fee

|
^
-■
i t *7J

(

900. ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE.
901.
902.
903.
904.
905.

Interest from
to
Mortgogo insurance premium for
Hazard insurance premium for

9$
mo. to
yrs. to
Vrs. to

1000. RESERVES OEPOSITED WITH LENDER POR:
1001.
1002
1003.
1004.
1005.
1006.
1007.
1008.

Hozard insurance
Mortgoge insuronce
City proparty taxes '
County property taxes
Annuot assessments

mo.
mo.
mo.
mo.
mo.
mo.
mo.
m

0$
(1$
$$
US
0$
o /

m

/dov

)

G eneral I n s t r u c t io n s

^
.

In fo rm a tio n an d am o u n ts m ay be filled
in by typew riter, h a n d p rin tin g , com puter
p rin tin g , o r any o th e r m eth o d producing
clear a n d legible re su lts. Copies of th e form
se n t to th e borrow er a n d th e seller m ay be
carbon copies, e le c tro sta tic copier copies, or
o th e r clearly legible copies. R efer to R egu­
latio n X regarding ru les applicable to p r in t­
ing of th e form .
W here th e re is a n u n u su a lly large n u m ­
ber o f Insertions fo r w hich b la n k spaces in
th e first tw o pages of th e fo rm are n o t s u f­
ficient, a n a d d itio n al sh e e t fo r su c h Item s
m ay be added to th e form a n d referenced a t
th e ap p ro p riate place o r places in th e form .
S uch a d d itio n a l sh e e ts m ay b e p rin te d . T he
reverse side of th e form m ay be used in stead
of a n ad d itio n al sheet.

(? L \3 ^

/mo
/mo.
/mo.
/ mo.
/ mo.
/ mo.
/m o.
o .

~

" ...... "

Settlement or closing fee to
Abstroct or title search to
Title examination to
Title insuronce binder to
Document preparation to
Notary fees to
Attorney's Fees to

"*

A
J

(includ es above item s \'o .:

*?j
^

i

1108. Title insurance to
*
(includ es above item s No.:
1109. Lender's coverogt $
1110. Owner's coveroae $
U ll.
*
1112.
1113.

^

Recording fees:

L in e It e m I n s t r u c t io n s

)
*

1200. GOVERNMENT RECORDING AND TRANSFER CHARGES
1201.

Deed $

; Mortgoge $

f p .c f )

Releases $

1204.
1300. ADDITIONAL SETTLEMENT CHARGES
1301.
1302.
1303.
1304.
1305.

S«v.»*o
Pol insMCtiat lo

e state tra n sa c tio n s is a p a rt of th e U niform
D isclosure /S e ttle m e n t S ta te m en t. I t is th e
th ird page of th e U niform D isclo su re/S ettle­
m en t F orm a n d m u st be com pleted in all
cases in w hich th e • T ru th in L ending Act
applies to th e tra n sa c tio n . F or specific in ­
stru c tio n s on T ru th -in -L e n d in g disclosure
re q u ire m en ts u n d e r th e R eal E sta te S e ttle ­
m e n t Procedures Act, re fer to th e I n s tru c ­
tio n s of th e Federal Reserve B oard, w hich
appear in A ppendix B to HUD’s R egulation
X (24 CFR P a rt 82).
T he disclosure in advance of se ttle m e n t is
th e re sp o n sib ility of th e lender. T he Act rec­
ognizes th a t th e precise a m o u n t of every
in d iv id u al charge to be assessed a t se ttle m e n t
will n o t alw ays be know n a t th e tim e of a d ­
vance disclosure. T he A ct provides: “In th e
event th e exact a m o u n t of an y su ch charge
is n o t available, a good fa ith e stim a te of
su ch charge m ay be provided.” As provided
in R eg u latio n X, th e advance disclosure s ta te ­
m e n t sh a ll s ta te a n “ ( e ) ” a fte r each figure
w hich is a n estim ate. E ach estim a te m u st be
s ta te d as a specific figure, an d n o t as a range
of possible figures.

{^

1100. TITLE CHARGES:
1101.
1102.
1103.
1104.
1105.
1106.
1107.

22455

" ..........................

(£ 7 )
-------

liOO. TOTAL SETTLEMENT CHARGES 'e n te re d on lines 103 anil S03. S ections / and K)
NOTE: Under certain circumstances the borrower and seller may be permitted to waive the 12-day period which must normally
occur between advance disclostre and settlement. In the event such a waiver is made, copies of the statements of waiver,
executed as provided in the regulations of the Department of Housing and Urban Development, shall be attached to and made a
pert of this form when the form is used as a settlement statement.
H U D -1 (5 -7 51

In s t r u c t io n s fo r C o m p l e t in g U n if o r m D i s closure/ S e tt l em en t
Statem ent
(HUD
F o r m 1)

T he follow ing are in stru c tio n s for com ­
p letin g th e first 2 pages of th e U niform D is­
c lo su re/S e ttle m e n t S ta te m e n t, HUD Form 1,
req u ired u n d e r Sections 4 a n d 6 of th e Real
E state S e ttle m e n t Procedures A ct of 1974
(P ublic Law 93-533) a n d th e R egulations
th e re to issued by th e U.S. D ep a rtm en t of
H ousing a n d U rban D evelopm ent called
R egulation X (24 CFR P a rt 82). T h is fo rm is
to be used to provide a n advance disclosure
of costs p rio r to se ttle m e n t, a n d as a u n ifo rm
sta te m e n t o f a c tu a l costs a n d a d ju s tm e n ts

to be given to th e p a rtie s in co n n ectio n w ith
th e se ttle m e n t. T he In stru c tio n s for com p letio n are p rim arily fo r th e benefit of th e
persons w ho prepare th e sta te m e n ts an d
need n o t be tra n s m itte d to th e p a rtie s as a n
in te g ra l p a r t of th e form . To d eterm in e if
th e U niform D isclosure /S e ttle m e n t S ta te ­
m e n t is legally req u ired to be used in a p a r­
tic u la r m ortgage lo an tra n sa c tio n , refer to
R egulation X of th e D e p a rtm en t of H ousing
a n d U rban D evelopm ent (24 CFR P a rt 82).
T here is no o bjection to th e use of th e form
in tra n sa c tio n s in w hich its use is n o t legally
required.
T he T ru th -in -L e n d in g S ta te m e n t p re ­
pared by th e F ederal Reserve B oard fo r real

In stru c tio n s fo r com pleting th e in d iv id u al
item s on th e form follow. W here n o in s tru c ­
tio n s are given, th e ite m is th o u g h t to be
self-explanatory.
Section A. T he lender, title com pany, or
o th e r firm p re p arin g th e form m ay in se rt its
nam e a n d /o r logotype in S ectio n A.
Section B. C heck a p p ro p ria te lo an type
a n d com plete th e rem ain in g item s as a p ­
plicable.
Section C. Check th e a p p ro p ria te box in ­
d ica tin g w h eth er th e p a rtic u la r copy of th e
fo rm being com pleted is fo r advance d is­
closure purposes or is a s ta te m e n t o f a c tu a l
costs a n d d isb u rsem en ts a t or a fte r s e ttle ­
m en t. As provided In R eg u latio n X , in p re ­
p a rin g th e advance disclosure sta te m e n t, th e
L ender m ay m ake th e disclosure of a d ju s t­
m en ts fo r taxes a n d assessm ents based up o n
th e assu m p tio n t h a t no tax es a n d assess­
m en ts are d e lin q u e n t, in lie u of d eterm in in g
from th e ap p ro p ria te records w h e th er de­
lin q u en cies exist. W here L ender m akes d is­
closure based u p o n su ch assu m p tio n , L ender
sh all place in Block C a s ta te m e n t th a t
advance disclosure of p ro ra tio n s o f taxes
a n d assessm ents is based u p o n th e assu m p ­
tio n t h a t taxes a n d assessm ents are n o t d e­
lin q u e n t. U nder R eg u latio n X, L ender is
p e rm itte d to p r in t su c h a s ta te m e n t in
B lock C; w here th e s ta te m e n t Is p rin te d in
th e form , i t is to be stric k e n w here n o t
applicable.
Sections D and E. F ill in th e n am es an d
c u rre n t m ailing addresses of th e borrow er
a n d th e seller. W here th e re is m ore th a n
one b u y er o r seller, th e nam e a n d address of
one is sufficient.

FEDERAL REGISTER, V O L 4 0 , NO. 100— THURSDAY, MAY 22, 1975

22456

RULES AND REGULATIONS

Section F and H. F ill in th e nam e a n d ad ­
dress of th e len d er a n d th e se ttle m e n t agent.
If, a t th e tim e of advance disclosure, th e se t­
tle m e n t a g en t h a s n o t yet been selected, th e
advance disclosure form sh o u ld have “n o t
know n” en te red in Section H.
Section G. T he s tre e t address of th e se­
c u rity property, if any should be given. If
th e re is no stre e t address, a b rief legal de­
sc rip tio n or o th e r lo catio n of th e pro p erty
should be in serted . In a ll cases give th e zip
code of th e property.
Section I . F ill in th ese d a te s to th e e x te n t
th ey are know n. I f advance disclosure is
m ade before com m itm ent, a n e stim a te d com ­
m itm e n t d a te sh o u ld be in se rte d a n d m arked
“ ( e ) ”. If th e se ttle m e n t d a te is n o t firm a t
th e tim e of advance disclosure, a n e stim ated
se ttle m e n t d a te sh o u ld be in se rte d a n d
m arked “ ( e ) ”. I f th e p ro ra tio n s of taxes,, in ­
surance, etc., are to be m ade as of a d ate
different th a n th e se ttle m e n t d ate, in d icate
th e d a te of p ro ra tio n s on th e la s t lin e in th is
section.
Section J. Sum m ary o f Borrow er’s Trans­
a ction. T he Borrow er m ay be given a copy

of th e form (in case of b o th advance d is­
closure an d se ttle m e n t) w hich does n o t co n ­
t a i n th e in fo rm a tio n filled in u n d e r “S u m ­
m ary of Seller’s T ran sac tio n ” (Block K, Ser­
ies 400, 500, a n d 600 ite m s ).
Lines 104 and 105 are for ad d itio n al
am o u n ts owed by th e buyer. F or exam ple,
th e balance in th e seller’s reserve acc o u n t
h eld by th e lender, if assigned to th e buyer
in a loan a ssu m p tio n case, w ould be e n tered
here.
Lines 106 th ro u g h 112 are for item s w hich
th e seller h a d p aid in advance, a n d fo r w hich
th e buyer m u st th erefo re reim b u rse th e
seller. O n th e advance disclosure sta te m e n t
th e exact d a te fo r p ro ra tio n s will n o t u su ally
be know n, a n d th ese a m o u n ts w ill th ere fo re
be estim ates. Exam ples of item s fo r w hich
a d ju s tm e n ts are m ade m ay include tax es a n d
assessm ents paid in advance for a n e n tire
year or o th e r period, w hen se ttle m e n t occurs
p rio r to th e ex p iratio n of th e year o r o th e r
period for w hich th e y were paid. See I n s tru c ­
tio n for Block C above reg ard in g advance dis­
closure of taxes a n d assessm ents on th e a s­
su m p tio n th a t no taxes a n d assessm ents are
d e lin q u e n t. A dditional exam ples include flood
a n d h azard in su ra n ce prem ium s if th e buyer
is being su b s titu te d as a n in su red u n d e r th e
sam e policy; m ortgage in su ra n ce in lo an a s­
su m p tio n cases; PUD or condom inium asso­
cia tio n assessm ents paid in advance; fu e l or
o th er supplies on h an d , pu rch ased by th e
seller, w hich th e b uyer w ill use w hen buyer
tak e s possession of th e property; a n d g round
re n t p aid in advance.
L in e 203 is used fo r cases in w hich th e
buyer is assum ing o r ta k in g title su b je ct to
a n existing loan or o th e r lien.
Lines 204 and 205 m ay be used in cases in
w hich th e seller h a s ta k e n a tra d e -in or o th e r
p roperty from th e b u y er in p a rt p a y m e n t for
th e p roperty being sold, o r w hen a te n a n t in
th e p ro p erty h a s n o t y e t p a id h is r e n t fo r a
period of tim e p rio r to th e se ttle m e n t, an d
w hich th e buyer w ill collect. T hey m ay also
be used in cases in w hich a seller (typically
a b u ild er) is m aking a n “allow ance” to th e
buyer for carp e ts o r d rapes w hich th e buyer
is to p u rchase on h is own. S uch a n allow ­
ance sh o u ld also be e n te red on lin es 505-509.
Lines 206 th ro u g h 212 are fo r item s w hich
have n o t y e t been paid, a n d w hich th e buyer
is expected to pay, b u t w hich are a ttr ib u t­
able in p a rt to a period of tim e p rio r to th e
se ttle m e n t. I n ju risd ic tio n s in w hich taxes
are p aid la te in th e ta x year, m ost cases will
show th e p ro ra tio n o f taxes in th ese lines.
See In s tru c tio n to B lock C above regarding
advance disclosure of taxes a n d assessm ents
o n th e assu m p tio n th a t no taxes a n d assess­
m en ts are d e lin q u e n t. O ther exam ples in ­

clude u tilitie s vised b u t n o t p aid fo r by th e
seller, re n t collected in advance by th e seller
from a te n a n t for a period ex tending beyond
th e se ttle m e n t d ate, an d in te re st on lo an a s­
su m p tio n s. As w ith lin es 106 to 112, these
a m o u n ts will norm ally be only e stim a te s on
th e advance disclosure sta te m e n t.
L in e 303 m ay in d ic a te e ith e r th e cash re ­
q u ired from th e borrow er a t se ttle m e n t (th e
u su a l case in a p u rchase tra n sa c tio n ) or cash
payable to th e borrow er a t se ttle m e n t (if, for
exam ple, th e b u y e r’s e arn e st m oney deposit
exceeded h is cash obligations in th e tr a n s ­
a ctio n ) . T h e a p p ro p ria te box should be
checked.
Section K . S um m ary o f Seller’s Transac­
tio n . T he Seller m ay be given a copy of th e

form (in case of b o th advance disclosure a n d
se ttle m e n t) w hich does n o t c o n ta in th e in ­
fo rm atio n filled in u n d e r “S um m ary of B or­
row er’s T ran sac tio n ” (Block J, Series 100,
200, a n d 300 ite m s ).
In stru c tio n s fo r th e use of lin es 106-112,
above, apply also to lines 4Q5 to 411.
As th e n o te o n th e fo rm in d icates, i t is
n o t necessary to com plete lin es 500 th ro u g h
603 w hen th e form is used for advance d is­
closure. T he reason is t h a t in fo rm a tio n a b o u t
payoff figures on existing liens m u st n o r­
m ally com e from a title search a n d payoff
le tte rs from o th e r lenders, a n d is th erefo re
o fte n n o t available a t th e tim e of advance
disclosure. T here is, however, njo o b jectio n to
th e com pletion o f th e se sectio n s a t th e
tim e of advance disclosure if th e len d er so
desires.
Line 504 is used i f th e p u rc h aser is as­
su m in g or ta k in g title su b je c t to existing
liens w hich are to be ded u cted fro m sales
price.
Lines 505 th ro u g h 509 m ay be used to lis t
ad d itio n al liens w hich m u st be p aid off
th ro u g h se ttle m e n t to clear title to th e p ro p ­
erty. T hey m ay also be used to in d icate
fu n d s to be held by th e se ttle m e n t a g en t for
th e p ay m en t of rep airs th e seller is obligated
to m ake or p ay m en t of w ater, fuel, or o th er
u tility b ills w hich c a n n o t be p ro ra te d be­
tw een th e p a rtie s a t s e ttle m e n t because th e
a m o u n ts used by th e seller p rio r to s e ttle ­
m e n t are n o t y e t know n.
If th e seller’s real e sta te broker h a s re ­
ceived a n d h eld a n e a rn e st m oney deposit
w hich exceeds th e com m ission owed to him ,
an d if he w ill te n d e r th e excess d ep o sit d i­
rectly to th e seller ra th e r th a n th ro u g h th e
se ttle m e n t agent, th e a m o u n t of excess d e­
po sit should be e n tered on one of lin es 505­
509, th u s red u cin g th e a m o u n t to be paid
to th e seller by th e se ttle m e n t a g en t by th a t
am o u n t.
In stru c tio n s fo r th e use of lin es 510
th ro u g h 515 are th e sam e as th o se fo r lines
206 to 212, above.
'
Section L. S e ttle m en t Charges. G eneral;
F or all item s except th o se p aid to a n d re ­
ta in e d by th e lender, th e nam e of th e p e r­
son or firm receiving th e p ay m en t sh o u ld be
show n.
L in e 700. If th e sales com m ission p a id by
th e seller is based on a p ercentage of th e p u r­
chase price, e n te r th e p u rchase price an d
th e percentage here.
Lin e 701. T he d o llar a m o u n t o f th e to ta l
com m ission p aid by th e seller is e n te re d here.
A single e n try is m ade, regardless of w h eth er
com pensation w ill be p a id to one a g en t or
sp lit am ong several agents.
Lines 702-703 a re to be used to s ta te th e
sp lit of th e com m ission w here th e person,
c o n d u ctin g th e se ttle m e n t disburses p o rtio n s
of th e com m ission to tw o or m ore agents.
Only th e to ta l com m ission is to be show n
in th e borrow er’s or seller’s colum ns.
L ine 704 m ay be u sed fo r a d d itio n al
charges m ade by th e sales ag en t, or fo r a
sales com m ission charged to th e buyer,
w hich w ill be d isbursed by th e se ttle m e n t
agent.

L in e 801. E n te r th e fee charged by th e
lender fo r processing o r o rig in a tin g th e loan.
I f th is fee is com puted as a percentage of
th e lo an am o u n t, e n te r th e percentage in
th e b lan k indicated .
L in e 802. E n te r th e lo an d isc o u n t charged
by th e lender, an d if i t is com puted as a
percentage of th e loan am o u n t, e n te r th e
percentage in th e b la n k indicated.
L in e 803. E n te r appraisal fees, if th e re is a
charge se p a ra te from th e o rig in a tio n fee.
L in e 805 is used only fo r in sp ectio n s by
th e L ender o r h is personnel. C harges for
o th e r p e st or s tru c tu ra l inspections req u ired
by R eg u latio n X to be s ta te d should be
e n te red in lines 1302-1305.
L in e 806 should be used fo r a VA appraisal
fee, FHA ap p lic atio n fee (w hich covers th e
cost of ap p raisal by th e agency as w ell),
or a fee req u ired by a p riv ate m ortgage in ­
suran ce com pany.
L in e 807 is provided fo r convenience in u s­
ing th e form fo r lo an a ssu m p tio n tra n s a c ­
tio n s if a fee is charged by th e L ender fo r
agreeing to a n a ssu m p tio n or tra n s fe r su b je c t
to a n existing Indebtedness.
L in e 901. I f in te re st is collected a t se ttle ­
m e n t fo r a p a rt of a m o n th or o th e r period
betw een se ttle m e n t a n d th e d a te from w hich
in te re st w ill be collected w ith th e first re g u ­
la r m o n th ly p aym ent, e n te r t h a t am o u n t
here. If su c h in te re st is n o t collected u n til
th e first reg u lar m o n th ly paym ent, n o e n try
should be m ade on lin e 901.
L in e 1000. T h is section is used for am o u n ts
collected by th e L ender an d h e ld in a n ac­
c o u n t for th e fu tu re p aym ent of th e obliga­
tio n s liste d a s th e y fall due. In m an y ju ris ­
d ictio n s th is is referred to as a n “escrow ”,
“im p o u n d ” or “tr u s t” account. In ad d itio n
to th e item s listed, som e L enders m ay require
reserves fo r flood insurance, condom inium
ow ners association assessm ents, etc.
L in e 1100. In m any ju risd ic tio n s th e sam e
person (e.g., a n a tto rn e y or a title in su ran ce
com pany) perform s several of th e services
listed in th is section, a n d m akes a single
u n d iffere n tia te d charge fo r so doing. In such
cases, e n te r th e overall fee on lin e 1107, (for
a tto rn e y s) or lin e 1108 (for title co m p an ies),
a n d e n te r on th e lin e provided th e ite m n u m ­
bers of th e services liste d w hich are covered
in th e overall fee. In su c h cases no am o u n ts
should be e n te red fo r th e in d iv id u al item s
w hich are covered by overall fees.
L in e 1101. E n te r h e re th e fee of th e person
o r firm c o n d u ctin g th e se ttle m e n t. I n som e
ju risd ic tio n s th is is term e d a closing o r
escrow fee. If tw o o r m ore persons or firm s
m ake charges in connection! w ith th e sam e
tra n sa c tio n , e n te r to ta l charges in th e a p ­
p ro p riate colum ns, an d in d icate th e b re ak ­
dow n of charges on th e lin e a fte r th e word
“to ”.
Lines 1102 and 1103. I n som e ju risd ic tio n s
th e sam e person (e.g., a n a tto rn e y ) both
searches th e title ( th a t is, perform s th e n e c ­
essary research in th e records) an d exam ines
title ( th a t is, m akes a d e te rm in a tio n as to
w h a t m a tte rs affect title , a n d provides a title
re p o rt or opinion.) If su c h a person charges
only one fee fo r tooth services, it sh o u ld be
en te red o n lin e 1103. If sep arate persons
perform th ese task s, or if sep arate charges
are m ade fo r searching an d exam ination, th ey
should be listed separately.
L in e 1105. E n te r charges fo r p re p a ra tio n of
deeds, m ortgages, n o tes, etc. If m ore th a n
one person receives a fee for su ch w ork in
th e sam e tran sac tio n , show th e to ta l paid
in th e ap p ro p riate c o lu m n and th e individual
charges on th e lin e follow ing th e w ord “to ”.
Lines 1108-1110. E n te r th e to ta l charge for
title in su ra n ce (except th e cost of th e title
bin d er) o n lin e 1108. E n te r on lin es 1109 and
1110 th e in d iv id u al charges fo r th e L ender’s
a n d ow ner’s policies. N ote th a t th ese charges
are n o t carried over in to th e borrow er’s and

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, MAY 22, 1975

22457

RULES AND REGULATIONS
seller’s colum ns, since to do so w ould re su lt
in a d u p lic a tio n of th e a m o u n t in lin e 1108.
Lines 1111-1113. T hese lin e s are for e n try
of o th e r title charges n o t already item ized.
Exam ples in som e ju risd ic tio n s w ould include
a fee to a p riv ate ta x service, a fee to a co unty
ta x collector fo r a ta x certificate, an d a fee to
a p u b lic title re g istra r for a certificate of
title u n d e r a T orrens Act. Show th e len d e r’s
a tto rn e y ’s fee, if any, on line 1107 a n d o th er
a tto rn e y s’ fees, if re q u ire d to be s ta te d u n d e r
R egulation. X, o n lines 1111-1113.
Lines 1303-1305. Enlter on, th e se line® any
o th e r se ttle m e n t charges n o t referrab le to
th e categories liste d above o n th e form w hich
are re q u ire d by R eg u latio n X to be s ta te d .
Exam ples m ay include s tru c tu ra l inspections

or p re-sale Inspection of h e atin g , plum bing,
or e lectrical eq u ip m e n t. These in sp ectio n
charges m ay in clude a fee fo r in su ran ce or
w arran ty coverage.
L in e 1400. E n te r th e to ta l se ttle m e n t
charges p a id from borrow er’s fu n d s an d
seller’s fu n d s. T hese to ta ls a re also e n te red
on lin e s 103 a n d 503, respectively, in Sec­
tio n s J a n d K.
Atta c h m en t

of

W aiv e r F o r m

T he w aiver or w aivers red u cin g th e period
betw een disclosure a n d se ttle m e n t (if any
are executed by th e p a rtie s) are a p a r t of
th e form w hen i t is. used as a se ttle m e n t
sta te m e n t, an d sh o u ld b e a tta c h e d to th e
form .
EXHIBIT

B

•

F e d e r a l T r u t h - in - L e n d in g S ta te m e n t
(As p a r t o f D i s c l o s u r e / S e t t l c m e n t S ta te m e n t)

I.

A.

Cash p r i c e ( c o n t r a c t s a l e s p r i c e )
1.
2.
3.

L e ss any ca sh downpayment
Less any t r a d e - i n
T o t a l downpayment

$_
5_

B.

E q u a ls u n p a id b a l a n c e o f ca sh p r i c e

C.

P lu s any o t h e r amounts f in a n c e d :

. ______________ $“

1.
2
3.

P r o p e r ty i n s u r a n c e premiums $

T o t a l o t h e r amounts f in a n c e d

E q u a ls u n p aid b a l a n c e
Less any p r e p a id f in a n c e c h a r g e s :
1.

4.

O rig in a tio n fee o r p o in ts
p a i d by bo rro w er
$_____
Loan d is c o u n t o r p o i n t s
p a id by s e l l e r
$______
I n t e r e s t from ( s p e c i f y d a t e )
to (sp ecify d a te )
$_____
M ortgage g u a r a n ty in s u r a n c e $____

5.

________________________________ $ _ ___

2.

3.

6.
F.

*

T o t a l p r e p a id f in a n c e ch arge

E q u a ls amount fin a n c e d

XI. The FINANCE CHARGE c o n s i s t s o f
A.

B.

I n t e r e s t ( s im p le a n n u a l r a t e
o f ______ X)

I I I . A.
B.

T o t a l p r e p a id f in a n c e ch a rg e
( I . E. 6 .)

T o t a l FINANCE CHARGE
The ANNUAL PERCENTAGE RATE on th e amount fin a n c e d i s
I f t h e c o n t r a c t in c lu d e s a p r o v i s i o n f o r v a r i a t i o n i n th e
i n t e r e s t r a t e , d e s c r i b e ______________________________________

IV. The repayment t e r n s a r e :

V.

The f in a n c e ch a rg e b e g i n s to ac c ru e on

(s p ecify d ate)

V I. In th e e v e n t o f l a t e paym ents, c h a rg e s may be a s s e s s e d as fo llo w s :

V II. CJse e i t h e r A o r B as a p p r o p r i a t e )
A.

C o n d itio n s and p e n a l t i e s f o r p re p a y in g t h i s o b l i g a t i o n a r e ___

B.

I d e n t i f i c a t i o n o f method L’f r e b a t e o f unearned f in a n c e cha rg e
is

V I I I . I n s u ra n c e ta k e n in c o n n e c tio n w ith t h i s o b l i g a t i o n :
IX. The s e c u r i t y f o r t h i s o b l i g a t i o n i s

*

T h is fo rm is th e F ederal T ru th in L end­
ing disclosure p o rtio n of th e D isclosure/
S e ttle m e n t S ta te m e n t to be provided by th e
D ep a rtm en t of H ousing a n d U rban Develop­
m e n t in co n n ectio n w ith th e R eal E state
S e ttle m e n t P rocedures A ct (P ub. L. 93-533).
T his fo rm is in te n d e d to provide a flexible,
m in im u m disclosure s ta n d a rd in sa tisfac tio n
of th e T ru th in L ending (R eg u latio n Z) re ­
q u irem e n ts of th e R eal E state S e ttle m e n t
Procedures Act. T h is form is designed to
accom m odate th o se T ru th in L ending d is­
closures w hich are m o st com m on to real
e sta te p u rch ase tra n sac tio n s. However, th e
fo rm is n o t com prehensive of all cred it
charges o r term s t h a t m ay be in c id e n t to
any p a rtic u la r federally re la te d m ortgage
loan. W hen a given tra n s a c tio n in clu d es less
com m on term s, su ch a s balloon paym ents,
for w hich no specific provision is m ade on
th e form , th ese term s w ill also need to be
disclosed a n d identified on th e form .
To m a in ta in th e form as a stan d ard ized
disclosure m echanism w hile s till providing
creditors w ith flexibility, c e rta in changes to
th e form m ay be necessary. As long as th e
applicable T ru th in L ending disclosure re ­
q u irem e n ts are m e t:
(a) D isclosures provided on th e form
w hich are n o t applicable to a given tr a n s ­
actio n m ay be deleted. For exam ple, th e fi­
n ance charge disclosures (Ite m H ) need n o t
be m ade in th e case of a pu rch ase m oney
first m ortgage o n a dw elling.
(b) D isclosures a n d language m ore p e r­
tin e n t to a specific charge or (term m ay be
s u b s titu te d fo r th o se p resen tly included.
F or exam ple, in Ite m VILA., if n o charge
will be assessed in th e e v en t of prep ay m en t
of a lo an o n w hich in te re st is co m p u ted o n
th e u n p a id p rin cip a l balance, a s ta te m e n t to
th a t effect m ay be su b s titu te d .
(c) A dditional space a n d /o r disclosures
m ay be provided w here necessary to satisfy
th e re q u ire m en ts of R eg u latio n Z. F or ex­
am ple, a d d itio n al space m ay be provided for
disclosures in Ite m IV; o th e r charges, such
as co n tin u in g prem ium s fo r m ortgage g u a r­
a n ty in su ran ce, m ay be added u n d e r Ite m

n.

$______

C.
D.

INSTRUCTIONS FOR FEDERAL TRUTH I N LENDING
STATEMENT 1

I n d i c a t e s a d a t e , r a t e o r amount t h a t i s e s t i m a t e d and may be s u b j e c t
t o ch a n g e.

T his fo rm is designed as a disclosure fo r
b o th lo an a n d c red it sale tra n sa c tio n s a n d
should be used regardless of w h eth er a given
tra n s a c tio n m ay be c h aracterized as a loan
or c re d it sale (§§ 226.6(d), 226.8(c) a n d
22 6 .8 (d )). T he fo rm co n ta in s c e rta in d is­
closure provisions w hich are re q u ire d in
cre d it sales disclosures u n d e r T ru th in L end­
ing b u t n o t re q u ire d in lo an disclosures.
Lenders who choose to m ake only th o se d is­
closures re q u ire d in co n n ectio n w ith loans
u n d e r R egulation Z m ay delete th e a d d itio n al
disclosures re la ted to th e c re d it sales. Also
a c e rta in a m o u n t of d e v iatio n m ay be neces­
sary in m ore com plicated tra n sac tio n s, su ch
as in th e case of p e rm a n en t fin an cin g fol­
low ing th e m a tu rity of a hom e c o n stru ctio n
loan.
'
T his form is in te n d e d to be used solely
for th e disclosures re q u ire d u n d e r th e F ed ­
eral T ru th in L ending Act. E xcept w ith re ­
sp ect to rescindable tran sac tio n s, as n o ted
below, all T ru th in L ending disclosures m ade
in com pliance w ith th e R eal E state S e ttle ­
m e n t Procedures Act sh a ll be m ade on one
1 N o t e : T hese in stru c tio n s are in ten d ed
to a ssist in th e com pletion o f th e T ru th in
L ending S ta te m en t, a n d except to th e e x te n t
to w hich R eg u latio n Z is in te rp re te d to
accom m odate th e R eal E state S e ttle m e n t
Procedures Act, th e in stru c tio n s are in no
way in te n d e d to supersede o r su p p lem en t
th e provisions of R e g u latio n Z. All sectional
references in th e in stru c tio n s are to R egu­
latio n Z (12 CFR 226).

FEDERAL REGISTER, VOL. 40 , NO. 100— THURSDAY, MAY 22, 1975

22458

RULES AND REGULATIONS

side of a single sh e e t regardless of any d if­
fering R e g u la tio n Z re q u ire m en ts. F o r ex­
am ple, in sp ite of th e provisions of § 226.8
(a) (1 ), for th e purposes of satisfy in g th e re ­
q u irem e n ts of th e R eal E state S e ttle m e n t
Procedures Act, prom issory n o tes or o th er
c o n tra c tu a l oblig atio n s sh a ll n o t be Included
on th e T ru th in L ending disclosure form .
Sim ilarly, in sp ite of § 226.6(c) (2 ), ,the T ru th
in L ending fo rm to be used in connection
w ith th e R eal E sta te S e ttle m e n t P rocedures
Act m ay n o t in clu d e in c o n siste n t S ta te d is­
closure re q u ire m en ts.
C harges u n d e r § 226.4(b) need n o t be ite m ­
ized on th is form , provided th ey are item ized
an d disclosed o n th e se ttle m e n t cost p o rtio n
of th e com bined form .
In th e e v en t t h a t a given tra n s a c tio n su b ­
je c t to th e R eal E state S e ttle m e n t P roce­
d ures A ct is rescindable u n d e r provisions of
§ 226.9 of R eg u latio n Z, tw o copies of a
notice of th e r ig h t of rescission (§ 2 2 6 .9 (b ))
sh a ll be given sep arately from th e prescribed
fo rm to each borrow er w ho h a s th e rig h t to
rescind.
B ona flde e stim a te s m ay be m ade in con­
n ectio n w ith d a te s or charges fo r w hich exact
d o llar a m o u n ts or ra te s are u n k n o w n a t th e
tim e of advance disclosure (§ 2 2 6 .6 (f)).
W hen e stim a te s are used, th ey sh o u ld be
su itab ly desig n ated as such, fo r exam ple, by
asterisk s placed n e x t to th e e stim a te d in fo r­
m atio n .
T he R eal E state S e ttle m e n t P rocedures Act
req u ires t h a t T ru th to L ending disclosures b e
m ade a t le a st 12 days before se ttle m e n t a n d
ag ain o n th e day o f se ttle m e n t. W hile tw o
se p a rate disclosures are req u ired , in th o se in ­
stan ces w here n o m ate ria l change o ccurs in
th e in fo rm a tio n re q u ire d to be disclosed, a
copy o f th e in itia l disclosure form m ay be
used in sa tisfa c tio n o f th e disclosure re q u ire ­
m en t o n th e day o f se ttle m e n t.
C reditors in u sin g th e p rescrib ed form m ay
d elete th e n u m b erin g system provided; th e
n u m b ers used o n th e form are in clu d ed solely
to aid in re la tin g p e rtin e n t in stru c tio n s.
However, in d e le tin g th e n u m b ers or
in m aking any o th e r a d ju s tm e n ts to
th e form , cred ito rs sh o u ld be guided toy th e
re q u ire m en ts o f § 226.6(a) to th e effect th a t
T ru th in L ending disclosures toe m ade clearly,
conspicuously, a n d in m ean in g fu l sequence.
C reditors m ay also a d d sig n a tu re s, dates, a n d
acknow ledgem ents to th e form .
Ite m I

Ite m I.A. is provided to show th e cash
price (c o n tra c t sales price) w hich should
e q u ate to th e a m o u n t show n o n lin e 101 of
th e s e ttle m e n t cost disclosure p o rtio n of th e
com bined form (§ 226.8(c) (1 )).

Item s I .A.I. a n d I.A.2. are provided to show
an y cash dow npaym ent o r tra d e -in . Ite m
I.A.3. is provided to show th e to ta l a m o u n t of
any dow npaym ents (g 226.8(c) (2 )).
Ite m I.B . is provided to show th e u n p a id
balance of th e cash price w hich sh o u ld equal
I .A. m in u s I.A.3. (5 2 2 6 .8 (c )(3 )).
Ite m I.C. is provided to show o th e r item s
w hich are financed as p a r t o f th e c re d it tra n s ­
actio n . For exam ple, p ro p erty dam age in su r­
ance prem ium s u n d e r I.C .l. are included' in
th e a m o u n t financed, if th e y a re financed as
p a rt o f th e c red it tra n sa c tio n a n d th e o th e r
c o n d itio n s of § 226.4(a) (6) a re m et. The
b lan k lin e I.C.2. is in te n d e d to Inclu d e sim i­
la r item s, w hich are financed, su c h as those
liste d in § 226.4 (to) o r ( e ) . Ite m I.C.3. is p ro ­
vided to show a to ta l of o th e r a m o u n ts fi­
n a n ce d (§ 226.8(c) ( 4 )).
Ite m I.D. is provided to show th e u n p a id
b alan ce (th e su m o f Ite m I.B. a n d I.C.)
(5 2 2 6 .8 (c )(5 )).
Ite m I.E. is in te n d e d to show p re p aid fi­
n a n ce charges a n d th e to ta l p re p aid finance
charges
(§§ 226.4(a)/226.8(d) (2 )/226.8(e)

(1)).
Ite m I.E .l. is provided to show th e o rig in a­
tio n fee o r p o in ts p a id d irectly by th e b o r­
rower, su c h as th e one p o in t p e rm itte d in
VA tran sac tio n s.
*
Ite m I.E.2. is provided to show th o se lo an
d isco u n ts or p o in ts p a id by th e seller w hen
th ey are p a r t o f th e finance charge (§ 226.­
406).
Ite m I.E.3. is provided to show th e p re ­
p ay m en t o f a n y accru in g in te re st charge
o n th e c o n tra c t u n til th e first p a y m e n t is
due. T h e b lan k spaces a re provided to show
th e d ates for w hich su c h in te re s t accrues.
(T he d a te s a n d a m o u n ts disclosed m ay fre ­
q u e n tly n eed to b e e stim ated .)
Ite m I.E.4. is provided to show th e pay­
m e n t of m ortgage g u a ra n ty in su ra n ce p re ­
m ium s, su ch as fo r FHA or p riv ate m ortgage
g u a ra n ty in su re rs, accru in g p rio r to th e
first re g u la r paym ent.
Ite m I.F . is provided to show th e a m o u n t
financed: th e difference betw een ite m I.D.
a n d IJE. (§§ 226.8(c) (7 )/226.8(d) (1 )).
Ite m I I

T h is item is provided to show th e com ­
p o n e n ts o f th e finance charge, su c h a s p re ­
p a id finance charges, a n d c o n tin u in g p re m i­
u m s fo r m ortgage g u a ra n ty in su ran ce, as
w ell a s to show th e to ta l a m o u n t o f th e
finance charge (§§ 226.4(a)/2526.8(d) (3 )).
Ite m II.A . provides th e o p tio n a l disclosure of
th e c o n tra c t ra te o f in te re s t a s a n a d d itio n al
ite m w here su c h in te re s t is c o m p u ted b y th e
a p p lic atio n o f a sim ple a n n u a l ra te .

I t e m III

Ite m I I I .A. is provided to show th e a n n u a l
percen tag e ra te a s d ete rm in e d In accordance
w ith § 226.5(b). Ite m III.B . is provided to
show a n y variab le in te re st ra te provisions
(§ 226.810).
Ite m IV

T h is item is provided to show th e repay­
m e n t term s (§ 226.8(b) (3 )).
Ite m V

T h is iitem is provided to sho w th e d a te on
w hich th e finance charge begins to accrue
only if t h a t d a te differs fro m th e d a te o f th e
tra n s a c tio n (§ 226.8(b) ( I ) ).
Ite m V I

T h is item is provided fo r th e disclosure of
an y a m o u n t o r m eth o d o f co m p u tin g th e
a m o u n t o f a n y d e fa u lt, delinquency, o r sim i­
la r charges payable in th e e v en t o f la te pay­
m en ts (§§ 226.4(c)/226.8(b) (4 ) ).
Ite m V II

T h is item is provided fo r th e disclosure of
th e consequences o f p rep ay m en t o f th e m o rt­
gage o bligation; e ith e r (A) o r (B) sh o u ld toe
used, a s applicable.
Ite m VILA, is provided fo r th e disclosure o f
co n d itio n s o r p e n altie s charged in th e ev en t
o f p re p ay m en t o f a lo an o n w hich in te re s t is
com puted o n th e u n p a id p rin cip a l b alance
(§ 226.8(b) (6 ) ). S h o u ld th e re toe n o p en alty
fo r prep ay m en t, a sta te m e n t to t h a t effect _
m ay be su b s titu te d .
Ite m VII.B. is provided to id e n tify th e
m eth o d o f re b a te o f u n e a rn e d finance
charges in th e e v en t o f p rep ay m en t in fu ll
of In sta lm e n t o b lig atio n s w hich in clude pre­
co m puted finance charges. I f n o re b a te will
be m ade, a s ta te m e n t to t h a t effect m u s t be
in clu d ed (§ 226.8(to) ( 7 )) .
Ite m V I I I

T h is Item is provided for th e disclosure of
in su ra n c e w ritte n in c o n n ectio n w ith th e o b ­
lig a tio n , su c h a s p ro p e rty dam age in su ran ce
(to b e disclosed in accordance w ith § 226.4
( a )'(6 )), c re d it life, a ccid en t, o r d isa b ility
In su ran ce (to toe disclosed in accordance w ith
§ 226.4(a) ( 5 )), a n d vendor’s sin g le in te re st
in su ra n c e (to toe disclosed in accordance
w ith § 226.404).
Ite m I X

T h is ite m is provided to show a n y secu rity
in te re sts ta k e n in co n n ectio n w ith th e tra n s ­
a c tio n ( | 226.2(z) a n d § 226.8(b) (5 ) ).
[FR Doc.75—13260 F iled 5-19-75;8:45 am ]

FEDERAL REGISTER, VOL. 40 , NO. 100— THURSDAY, MAY 22, 1975

22459

NOTICES
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT

Se t t l e m e n t C osts

Office of Assistant Secretary for Housing
Production and Mortgage Credit— Fed­
eral Housing Commissioner

T he c o n te n t of th is booklet h as been p re ­
pared, prescribed an d approved by th e U.S.
D ep artm en t of H ousing a n d U rban Develop­
m en t, as req u ired by sectio n 5 of th e Real
E sta te S e ttle m e n t P rocedures A ct of 1974
(Pub. L. 93-533), effective on Ju n e 20, 1975.
T his p u b lic a tio n m ay be re p rin te d . How­
ever, in no case m ay any change, deletion, or
ad d itio n be m ade in its co n te n t.
F or sale by th e S u p e rin te n d e n t of D ocu­
m ents, U.S. G overnm ent P rin tin g Office,
W ashington, D.C. 20402.

[D ocket No. N-75-311]

REAL ESTATE SETTLEMENT COSTS
Special Information Booklet

N otice is hereby given that HUD has
prepared the booklet, “Settlem ent Costs”
pursuant to Section 5(a) of the Real Es­
tate Settlem ent Procedures Act of 1974.
Section 5(a) requires HUD to prepare
and distribute to lenders who make fed­
erally related m ortgage loans a special
inform ation booklet to better inform per­
sons borrowing money to finance the
purchase of residential real estate con­
cerning the settlem ent process. The
booklet explains the purpose of each cost
involved in a settlem ent, reproduces and
explains the standard disclosure/settle­
m ent form required by sections 4 and 6 of
the Act, discusses such abuses as unfair
practices and unreasonable charges, and
explains choices available to homebuy­
ers in shopping for settlem ent services.
Section 5(c) of the Act requires each
lender which makes federally related
mortgage loans to provide the booklet
to each person subm itting an application
to borrow money to finance the purchase
of residential real estate. The lender is
required to provide the booklet at the
tim e it receives the application.
To insure that each federally related
mortgage lender has a sufficient supply
of booklets on hand on the effective date
of the Act, June 20, 1975, the D epart­
m ent will provide an initial supply of
booklets for lender use at each HUD Area
and Insuring Office and expects that the
booklets will be available in early June.
Lenders may pick up a lim ited supply
from these offices but no m ail or tele­
phone orders can be accommodated.
After this initial distribution, additional
supplies of the booklet will be on sale
through the Government Printing Office
and m ust be paid for by the lender.
This booklet (1) may be reproduced
and distributed by lenders, using a cover
of their own design (which may bear
the name of the lend er), without further
approval by HUD; or (2) lenders may
print and distribute booklets approved
by the Secretary as to form and content.
In the form er case, it is not permissible
to make any change, deletion, or addi­
tion in the content of the booklet as pre­
pared by HUD. Lenders desiring to take
advantage of the latter option should so
request in writing and submit proposed
booklets for review to the Office of Gen­
eral Counsel, Departm ent of Housing and
Urban Development, Room 2253, 451 7th
Street, SW., W ashington, D.C. 20410.
A copy of the contents of the booklet
which may be reproduced by lenders is
set forth as an appendix to this notice.
D avid M . de W il d e ,
A c tin g A s s is ta n t S e c r e ta ry f o r
H o u s in g
P r o d u c t io n
and
M o r tg a g e C r e d it, F H A C o m ­
m i s s io n e r .

A HTJD GUIDE

contents

Forew ord
Home L oan F in an cin g
D isclo su re/S ettlem en t S ta te m e n t
A dvance D isclosure
U nfair P ractices a n d U nreasonable or U n­
necessary C harges to Avoid
Escrow A ccounts
Previous Selling Price D isclosure
Ju risd ic tio n of C ourts
T ru th in L ending D isclosure
FOREWORD

Y ou are p lan n in g to b u y a hom e. W hen
you do, you w ill probably m ake a dow npay­
m en t a n d finance th e balan ce of th e p u rch ase
price w ith a lo an secured by a m ortgage on
your hom e.
Before you ta k e possession of your hom e,
a closing o r se ttle m e n t w ill occur a t w hich
ow nership of th e p ro p e rty will be tra n sfe rre d
to you, a n d your oblig atio n to repay th e
m ortgage loan w ill becom e effective. T he
term s a n d c o n d itio n s of th e lo an —in te re st
ra te , m o n th ly p aym ent, a n d th e rep ay m en t
period—are specified in th e do cu m en ts signed
by you. T hese in clu d e a n o te evidencing th e
lo an fo r th e u n p a id pu rch ase price, a m o rt­
gage placing a lie n o n your hom e, a n d o th er
docum ents.
In som e S tates, i t is th e cu sto m fo r th e
buyer a n d seller to a tte n d th e s e ttle m e n t in
person; in o th ers i t is h a n d le d a u to m a tic ally
by a n escrow a g en t w hen all p a p ers a n d fu n d s
have been deposited w ith him .
A t th e closing o r se ttle m e n t, b o th you a n d
th e seller w ill have to pay c e rta in charges
in cid e n t to tra n sfe rrin g title to re al e sta te
a n d o b ta in in g th e m ortgage loan. T hese
charges are called “se ttle m e n t costs” or
"closing costs”.
T his booklet h a s been p rep ared to inform
you, th e buyer, a b o u t th e n a tu re a n d costs
of th e s e ttle m e n t process. As re q u ire d by law,
th is booklet is given to you by a len d in g
in s titu tio n a t th e tim e you apply for a m o rt­
gage loan to finance th e p u rch ase of a o n e- to
fo u r-fam ily re sid e n tia l dw elling. A t th is
stage, you have selected th e hom e you w an t
to buy. Y ou m ay have already reached in ­
form al agreem ent w ith a seller or even signed
a sales c o n tra c t a n d m ade a d ep o sit (“e arn e st
m oney d eposit”) in d ic a tin g your serious in ­
te n tio n to buy—a deposit w h ic h ' could be
fo rfeited sh o u ld you fa il to com plete your
purchase.
T h is booklet is in te n d e d to a c q u a in t you
w ith th e a p p ro p ria te procedures a n d charges
for se ttle m e n t services w hich you w ill e n ­
c o u n te r in closing yo u r hom e pu rch ase
tran sac tio n .
F or answ ers to specific q u e stio n s o r for
In fo rm atio n on m ortgage lending a n d se ttle ­
m e n t p ractices in your locality, you m ay
w a n t to c o n su lt a S ta te or local consum er
affairs agency, a n atto rn e y , a legal a id society,
or th e local re al e sta te board.

deed of tru s t) w hich you m u st sign, w hich
pledges th e hom e as secu rity fo r rep ay m en t
of th e loan. I f you fa il to repay th e lo an or
com ply w ith th e term s a n d co n d itio n s of th e
m ortgage, th e len d er c a n in itia te foreclosure
of th e lo an w hich w ould lead to sale of your
hom e a t a public a u c tio n to satisfy th e debt.
In a hom e m ortgage tran sac tio n , you p ro m ­
ise to repay th e loan and in te re st in
m o n th ly in sta llm e n ts a t th e in te re st ra te a n d
over th e period of tim e specified in th e
m ortgage c o n tra ct. I n th e early years w hen
your d e b t is largest, m o st of th e m o n th ly
p ay m en t goes for in te re st. T he a m o u n t a p ­
plied to th e o u tsta n d in g d e b t g radually in ­
creases so th a t in th e final years of th e
m ortgage m o st of th e p a y m e n t goes to p rin ­
cipal a n d less to in te re st. T h is is know n as a n
am ortized m ortgage, a n d m ost m ortgages
are w ritte n th is way.
I n som e S tates, th e se c u rity in stru m e n t
in ste a d of being a m ortgage is a deed of tr u s t
u n d e r w hich th e borrow er deeds th e p ro p erty
to a tru ste e . N orm ally, th e term s o f a deed
of tr u s t are su b sta n tia lly th e sam e as those
of a m ortgage.
H usband a n d wife o fte n ta k e n title to th e ir
hom e as jo in t te n a n ts w ith rig h t of survivor­
ship. You m ay w ish to seek legal advice on
th is a n d o th e r m atters. T he m an n e r in w hich
you ta k e title to th e hom e you b u y can have
im p o rta n t incom e tax , e sta te p lan n in g , a n d
o th e r consequences.
d is c l o s u r e / s e t t l e m e n t s t a t e m e n t

T he R eal E sta te S e ttle m e n t P rocedures A ct
o f 1974 (P ub. L. 93-533) re q u ire s u se of a
sta n d a rd fo rm fo r advance disclosure o f s e t­
tle m e n t costs a n d to record a c tu a l charges
in cu rre d a t s e ttle m e n t in a ll m ortgage tr a n s ­
actio n s involving federally re la te d loans.
T h e sam e fo rm is used for b o th advance
disclosure a n d se ttle m e n t a n d is reproduced
on th e follow ing pages to a c q u a in t you w ith
it. S e ttle m e n t co st Item s a re n u m b ered to
correspond w ith th e accom panying exp lan a­
tio n o f each ite m . T h e listin g o f th e se item s
o n th e fo rm does n o t Im ply t h a t a n y p a r­
tic u la r charge liste d is or should be m ade in
a given geographic area. Even in a given geo­
grap h ic area, you m ay find t h a t d ifferen t
lenders a n d providers o f s e ttle m e n t services
vary a s to w h eth er th e y m ake c e rta in charges
a n d as to th e a m o u n t o f th e charge. Y ou m ay
w ish to “shop a ro u n d ” .
Som e s e ttle m e n t c o sts ty p ically a re charged
to th e buyer. O th ers u su a lly a re th e resp o n si­
b ility o f th e seller. A lthough local custom
a n d p ractices o fte n d ic ta te w hich a re th e
b u y e r’s a n d w hich th e se lle r’s costs, th e re
a re n o h a rd a n d fa s t ru les t h a t apply, a n d
in m o st cases th e b u y er a n d seller c a n nego­
tia te a s to w ho w ill pay specific se ttle m e n t
charges. Y ou c an also n e g o tia te w ith p ro ­
viders of se ttle m e n t services as to w h eth er
each charge w ill be m ade a n d th e a m o u n t.
Y ou sh o u ld b e charged on ly fo r services a c ­
tu a lly perform ed, as re q u ire d by se ttle m e n t
p ractices In a p a rtic u la r locality.
1. C o n tra ct Sales Price. T h is is th e p rice of
th e hom e agreed to in th e sales c o n tra c t
betw een b u y er a n d seller.
2. Personal P ro p e rty . Those item s, su ch as
carp ets, drapes, o r appliances, w hich th e se ll­
e r tra n s fe rs w ith th e hom e, m ay be p a id for
by th e b u y er a t se ttle m e n t. W hen th e sales
c o n tra c t is m ade, you sh o u ld m ake su re th a t
ite m s to be tra n sfe rre d a re described. T he
sales c o n tra c t sh o u ld s ta te w h eth er su c h
ite m s a re In clu d ed in th e sales price.
3. S ettle m en t Charges. T his is th e to ta l
a m o u n t o f th e s e ttle m e n t charges to ibe p aid
by th e buyer. T hese charges a re item ized on
page 2 o f th e form .
HOM E LOAN FINANCING
4,9. A d ju stm e n ts o r P ro -ra tio n s. T hese
T he hom e p u rchase loan is evidenced by a m o u n ts re p rese n t p ro -ra te d a d ju s tm e n ts of
your sig n a tu re on a n o te or bond, a n d th e c e rta in costs, su ch a s real e sta te taxes, u t il ­
lo an (your d e b t) is secured by a m ortgage (or ities, a n d fuel. S uch a d ju s tm e n ts a re o ften

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, MAY 22, 1975

NOTICES

22460
mn^<i in o rd e r to p ro -ra te su c h costa In order
to ch arg e th e seller fo r th e period h e ow ned
th e p ro p e rty (u p to se ttle m e n t) a n d to
charge th e b u y er fo r th e perio d a fte r s e ttle ­
m en t. Ite m 4 s ta te s a m o u n ts fo r w hich th e
buyer com pensates th e seller. Ite m & sta te s
a m o u n ts ’fo r w hich th e seller com pensates
th e b uyer. As a n exam ple, w here se ttle m e n t
occurs O ctober 1, 1975, a n d th e seller h a s
p a id th e re al e sta te tax e s in advance fo r th e
e n tire year, a ty p ic a l a d ju s tm e n t w ould be
fo r th e b u y er to com pensate th e seller fo r
o n e -fo u rth o f th e re al e sta te tax e s fo r 1975,
t h a t Is, th e p erio d fro m O ctober 1 th ro u g h
D ecem ber 31. T h a t a m o u n t w ould b e show n
a t Ite m '4.
'
5. Gross A m o u n t Due fro m Borrow er. T his
la th e to ta l a m o u n t o f a ll charges to th e
b u y e r in clu d ed in ite m s 1, 2, 3, a n d 4.
6. Deposit o r Earnest Money. T h is is th e
a m o u n t o f m oney d eposited by th e b u yer
u n d e r th e c o n tra c t o f sale, u su a lly a t th e
tim e i t w as signed.
7.. P rin c ip a l A m o u n t o f L o a n (s ) . T h is Is
th e a m o u n t o f m ortgage m oney loaned to
th e buyer to p u rc h ase h is hom e.
8. E x is tin g L o a n(s) Taken S ubject To.
T h is sp ace Is used fo r cases in w hich th e
b u y e r is assu m in g or ta k in g title su b je c t to
a n existing lo a n o r o th e r lie n on w hich he
is expected to m ake th e paym ents.
10. T o ta l A m o u n ts P aid B y o r I n B e h a lf
o f Borrow er. T h is a m o u n t is th e su m of item s
6, 7, 8, a n d 9 above w hich will be applied to
reduce th e a m o u n t of charges to th e buyer
in ite m 5 above.
11. Cash R equired F rom (Payable To) B o r­
row er. T his is th e to ta l a m o u n t of cash w hich
th e b u yer w ill need a t se ttle m e n t (su b tra c t
item 10 from ite m 5 ). A t tim e of advance d is­
closure th is is th e e stim a te d am o u n t.
12. Real Estate B ro ke r’s Sales Compensa­
tio n . T h is charge com pensates th e real e state
broker or brokers fo r services involved in
listin g an d selling th e property, a n d is n o r­
m ally th e seller’s o b lig atio n to pay. T his
com m ission o r fee m ay be sp lit am ong m ore
th a n one broker if each perform ed services in
co nnection w ith th e tra n sa c tio n , b u t no p e r­
son m ay accept any p o rtio n , s p lit or p e r­
centage of su c h com m ission or fee o th e r th a n
tor services a c tu a lly perform ed.
13. Loan O rig in a tio n Fee. T h is com pensates
th e len d e r fo r expenses in cu rre d in o rig in a t­
ing th e loan, p rep arin g d ocum ents, a n d re ­
la te d work. W hen su ch a fee Is charged, it
is u su a lly a p ercentage of th e face a m o u n t
of th e m ortgage. In FH A -insured or VAg u a ran tee d m ortgage tra n sa c tio n s involving
ex istin g stru c tu re s, th e fee charged th e b o r­
row er can be no m ore th a n one p e rc e n t of
th e m ortgage am o u n t. F or exam ple, if you
a re approved fo r a V A -guaranteed lo an of
$30,000, th e o rig in a tio n fee charged -to you
m ay n o t exceed $300. However, w hen th e
len d e r m akes in spections a n d p a rtia l d is­
b u rse m en ts d u rin g c o n stru c tio n of a new
hom e, b o th FHA an d VA p e rm it a h ig h e r o rig ­
in a tio n fee, b u t n o t m ore th a n 2 y2 % fo r
FH A -insured loans o r 2% fo r V A -guaranteed
loans. T he F arm ers Hom e A d m in istratio n
does n o t p e rm it a lo an o rig in a tio n fee.
14. Loan D is c o u n t P oints. D iscounts o t
“p o in ts” are a o n e -tim e charge m ade by th e
len d er to increase Its yield (th e effective in ­
te re st r e tu rn or incom e) o n th e m ortgage
loan. E ach “p o in t” is o ne p e rce n t of th e m o rt­
gage a m o u n t.
I n FHA a n d VA tran sac tio n s, th e buyer
m ay n o t be charged a d isc o u n t by th e lender,
b u t th e seller m ay v o lu n teer to p ay p o in ts
in order to help th e b uyer o b ta in financing.
F or exam ple, if a len d er charges 4 p o in ts
o n a n FH A -insured loan of $30,000, th is
a m o u n ts to a d isc o u n t of $1,200. You, th e
buyer, m ay pay only th e lo an o rig in a tio n fee
described in n o te 13 if i t Is a VA o r FHA

tra n sa c tio n . D iscounts are n o t p e rm itte d on
F arm ers Home A d m in istra tio n loans.
15. A ppraisal Fee. T his charge com pensates
th e len d er for a p ro p erty ap p raisal m ade by
a n in d ep e n d e n t ap p raiser or by a m em ber of
th e len d er's staff.
16. C re d it Report. T he b u y e r’s cred it h is ­
to ry is o ften o b tain ed by th e len d er a n d a
charge p a id to a cred it b u re a u fo r a sc e rta in ­
ing th e s ta tu s of th e b u y e r’s c red it m ay be
collected, u su ally from th e buyer.
17. Lender’s In sp e ctio n Fee. T h is charge
covers only in sp ectio n s m ade by personnel of
th e len d in g In stitu tio n a t its d iscretio n . P est
or o th e r in sp ectio n s m ade by com panies o th er
th a n th e len d er are described in n o te 31.
18. M ortgage Insurance A p p lic a tio n Fee.
T h is covers th e cost of a n FHA o r VA a p ­
p raisal, w hich in a n FHA loan is in clu d ed in
a m ortgage in su ra n ce a p p lic atio n fee. For
co n v en tio n al loans it m ay cover a p p licatio n
fees w hen charged by p riv ate m ortgage in ­
surers. I n th e case of a n FH A -insured m o rt­
gage, th e a m o u n t of th is charge is se t by HUD
R egulations a n d m ay be charged to th e buyer.
T he b uyer In a V A -guaranteed lo an m ay n o t
be charged a n ap p raisal fee u n less Identified
by nam e in th e re q u e st fo r VA’s appraisal.
19. A ssum ption Fee. I n a case w here th e
b uyer assum es th e seller’s existing m ortgage
on th e property, th e len d er’s charges for
processing th e a ssu m p tio n are e n te red here.
20. P repaid In te re s t. T h is charge covers
in te re st w hich w ill accrue from th e d a te of
se ttle m e n t to th e b eg inning of th e period
covered by your" first m o n th ly pay m en t. For
exam ple, if your m ortgage p a y m e n t is due
o n th e 1st of each m o n th , b u t se ttle m e n t
occurs o n A pril 20, th e p rep aid in te re st a t
se ttle m e n t w ill cover th e period fro m A pril 20
to A pril 30 if your first m o n th ly m ortgage
p a y m e n t is due on Ju n e 1st. T h u s your
J u n e 1 p ay m en t w ill n o t have to in clu d e a n
e x tra a m o u n t of in te re st fo r th e p erio d before
May 1.
"
21. Prepaid M ortgage Insurance P rem ium .
T h is Is th e p o rtio n of th e prem iu m prepaid
by th e b uyer a t se ttle m e n t for m ortgage in ­
surance. T h is ty p e of in su ra n ce is req u ired
w hen FHA or a p riv ate m ortgage In surance
com pany covers th e len d er a g ain st loss if th e
b uyer fails to m eet th e m ortgage obligation.
M ortgage In su ran ce prem ium s are req u ired
fo r a ll FH A -insured loans (b u t n o t fo r VA
loan g u a ra n te e s), a n d m ay be re q u ire d on
a co n v en tio n al loan.
T h is type of In su ra n ce sh o u ld n o t be con­
fused w ith m ortgage life, c re d it life, or d is­
a b ility in su ran ce designed to pay off a m o rt­
gage In th e event of physical d isa b ility or
d e a th of th e borrow er. S uch in su ra n ce Is
available b u t visually n o t re q u ire d by lenders.
22. Prepaid Hazard Insurance P rem ium .
T h is is th e p o rtio n o f th e p rem iu m prepaid
by th e b uyer a t s e ttle m e n t fo r pu rch ase from
a p riv ate com pany of in su ra n ce a g ain st loss
d u e to fire, w indstorm , a n d n a tu ra l hazards.
T h is coverage m ay be Included In a H om e­
ow ners Policy w hich in su res a g a in st p o s­
sible a d d itio n al risks, su c h as personal lia b il­
ity a n d th e ft.
A h a za rd Insurance o r hom eow ner’s policy
does n o t p ro te c t you a g a in st loss caused by
flooding. I n special flood-prone areas id e n ti­
fied by HUD, you m u st carry flood in su ran ce
on your hom e. S u ch in su ra n ce m ay be p u r­
chased a t low federally subsidized ra te s in
co m m u n ities eligible u n d e r th e N ational
Flood In su ra n c e Act. C o n tac t a local h azard
in su ra n ce a g en t concerning eligibility in your
case.
23. Reserves Deposited w ith Lender. These
fu n d s are placed by th e buyer in a n “es­
crow ” or “im p o u n d ” a cc o u n t m ain ta in e d by
th e len d e r to assure a n ad eq u a te a ccu m u la­
tio n of fu n d s to m eet charges fo r real e sta te
taxes a n d h azard in su ra n ce w hen th ey b e­
com e due; a n d also, If applicable, fo r m o rt­
gage Insurance, a n n u a l assessm ents, hom e­
ow ners’ association fees, or flood insurance.

(T hese reserves are explained in m ore d e ta il
late r.)
T hese reserves m ay be h eld In n o n -in te re st
b earin g accounts. However, c e rta in S ta te s now
re q u ire lenders to pay in te re st on th is m oney,
a n d len d ers in o th e r S ta te s m ay be w illing
to do th is volu n tarily .
24. S ettlem ent, Closing, or Escrow Fee. T his
charge m ay be m ade fo r h a n d lin g a n d su p e r­
vising th e se ttle m e n t tran sac tio n . T he s e t­
tle m e n t m ay be conducted by th e lender, a
real e sta te broker, a title com pany in some
S tates, a n escrow a g en t in som e S tates, o r an
a tto rn e y . T he seller a n d b uyer m ay negotiate
regarding w ho pays o r w h eth er th e charge is
sh ared betw een th em . T he a m o u n t of th e
charge m ay be n eg o tiated w ith th e p ro ­
vider of th e service. In a V A -guaranteed
loan, th is fee c a n n o t be charged to th e buyer
w hen th e buyer Is assessed th e 1% o rig in a ­
tio n fee.
25. T itle Charges. T hese charges cover th e
costs of title search a n d ex am in atio n of
p u b lic records of previous ow nership a n d
sales to e stab lish th e rig h t of th e seller to
convey th e p ro p erty to th e buyer. A search
a n d ex am in atio n are perform ed to determ ine
w h eth er th e seller h a s good title to th e p ro p ­
e rty th a t h e c an tra n s fe r to th e buyer, a n d to
disclose any m a tte rs o n record t h a t could
adversely affect th e buyer, th e lender, or
o th ers w ith a n in te re st in th e property. Ex­
am ples of th ese problem s are u n p a id m o rt­
gages, Judgm ent of ta x liens, a pow er line
easem ent o r a road rig h t-o f-w ay th a t could
lim it use a n d e n jo y m en t of th e real e sta te
by th e buyer.
I n som e p a rts of th e n a tio n , a title search
cu sto m arily tak e s th e form of a n “a b stra c t”,
w h ich is a com pilation in clu d in g copies of
p e rtin e n t do cu m en ts t h a t provides a con­
densed h isto ry of p ro p erty ow nership a n d
re la te d m atters. I n o th e r places, title searches
are perform ed by e x tra c tin g re la ted in fo rm a ­
tio n from th e p u b lic record w ith o u t assem ­
bling a b strac ts. E ith e r way, i t th e n is neces­
sary fo r a n ex p ert e x am in atio n to be m ade of
th e evidence a ccu m u lated in th e search in
o rder to d eterm in e s ta tu s of title a s show n
by th e p u b lic record.
D epending o n local custom , title exam ina­
tio n s norm ally are m ad e by a tto rn e y s o r title
com pany em ployees. T h ro u g h a title search
a n d exam ination), la n d t itle problem s of
record a re disclosed in advance so th e y can
be cleared up, w hen possible, before a tra n s ­
a c tio n is com pleted.
26. N o ta ry Fees. T h is ch arg e m ay be m ade
fo r th e services o f a n o tary in a u th e n tic a tin g
sig n a tu re s to th e vario u s d o cu m en ts in th e
tra n sa c tio n . I n a V A -guaranteed loan, th is
fee c a n n o t be c harged to a buyer in th e event
th e b u y e r is charged a 1 % o rig in a tio n fee.
27. A tto rn e y ’s Fees. T hese in clu d e charges
w hich th e len d e r m ay re q u ire th e b u y er to
pay fo r legal services to th e len d er in con­
n e ctio n w ith th e tr a n s a c tio n .'T h e buyer
sh o u ld n o t assum e t h a t h e is rep resen ted
by a n a tto rn e y h ire d by th e len d er w ho p re ­
p ares th e d o cu m en ts a n d h a n d le s th e s e ttle ­
m en t. I n a V A -guaranteed loan, th is len d er's
a tto rn e y fee c a n n o t b e charged if th e b u yer
is charged th e 1% o rig in a tio n fee.
T he b u y er a n d seller m ay each re ta in a t ­
to rn ey s to re p re se n t th e m a n d m ay pay th e
fees a t th e se ttle m e n t, in w hich case these
fees also a p p ea r o n th is p a r t o f th e form .
In som e S ta te s, a tto rn e y s provide b a rre la te d title in su ra n ce as p a rt o f th e ir serv­
ices to th e b u y er fo r tra n s fe r o f title . H ie
a tto rn e y ’s fee in th is case m ay in clu d e th e
title in su ra n ce prem ium .
28. T itle Insurance. A o n e -tim e p rem iu m
m ay be charged a t s e ttle m e n t fo r a policy
w hich p ro tec ts th e le n d e r’s in te re s t in th e
p ro p erty a g ain st la n d title problem s in clu d ­
ing th o se t h a t m ig h t n o t be disclosed by a
title search a n d exam ination. W h eth e r th e
b u y er o r seller pays fo r th is varies w ith local
custom .

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, MAY 22, 1975

NOTICES
T he b u y er m u st re q u e st a n d pay fo r a n
a d d itio n al ow ner’s policy if h e w a n ts th is
p ro te c tio n fo r h is in te re s t in th e p roperty.
T here are m any a rea s w here a n ow ner’s p o l­
icy c an be o b ta in e d a t a m o d est ad d itio n al
charge if issued sim u ltan eo u sly w ith a le n d ­
e r’s policy. I n som e areas, th e seller pays
fo r th e ow ner’s title in su ra n ce policy.
29. G overnm ent T ransfer
Taxes and
Charges. T he fees a n d tax e s in th is sectio n
are generally levied by S ta te a n d /o r local
g overnm ents w hen p ro p erty changes h a n d s
or w hen a m ortgage lo an is m ade. Depending*
on local custom , th ese charges m ay be paid
by th e buyer, seller, o r otherw ise s p lit be­
tw een th em .
'
30. Survey. T he len d er o r a p a rty to th e

22461

tra n sa c tio n m ay re q u ire a survey show ing
th e precise lo catio n of th e h o use a n d lo t
lines.
31.
Inspections. T his p a rt of th e form re ­
cords charges fo r various in sp ectio n s re ­
q u ired by th e len d e r or a p a rty to th e tra n s ­
action, su c h as th o se for te rm ite a n d o th e r
p est in festa tio n . I n a V A -guaranteed loan,
th e buyer m ay n o t be charged fo r th e p est
inspection.
T here m ay also be p re-sale in sp ectio n s for
th e b uyer’s b enefit to ev alu ate h eatin g ,
plum bing, a n d electrical eq u ip m e n t a n d
overall s tru c tu ra l soundness. T h e charge for
su c h a n in sp ectio n m ay Include a fee fo r
in su ran ce or w a rran ty services to back -u p
th e inspection.
F «rm Appr oved
OMB No. 63- R1S 01

**

B. T Y P E O F L O A N :

U.S. DEPART ME NT OF HOUSING AND URBAN DEVEL OPM ENT

*• CJ FHA 2*(Tj FMHA
4. 11: VA
5. Q“* CONV.

DISCLOSURE/SETTLEMENT STATEMENT

6.
8.

3-

dj

CONV. u n i n s .

INS.
7.

FIL E NUMBER

LOAN N U M B E R

M O R T G . INS . C A S E NO.

If the Truth-in-Lending Act applies to this transaction, a Truth-in-Lending
statement is attached as pate 3 of this form.
N O T E : This form is furnished to you prior to settlement to give you information about your settlement c o sts, and again after
settlement to show the actual costs you have paid. The present copy of the form is:

C.

[31 ADVANCE DISCLOSURE OF COSTS. Some items are estimated, and are marked “ (e)” . Some amounts may change if
the settlement is held on a date other than the date estimated below. The preparer of this form is not responsible for errors
or changes in amounts furnished by others.
,
H J STATEMENT OF ACTUAL COSTS, Amounts paid to and by the settlement agent are shown. Items marked "(p .o .e.)’’
were paid outside the closing: they are shown here for informational purposes and are not included in totals.
E.

4E O F BORR OWE R

G.

P R O P E R T Y L O CA TI ON

SELLER

H.

SE T T L E M E N T AGENT

P L A C E O F S E T T L EM E N T

LOAN COMMITMENT

ADVANCE DISCLOSURE

S E T T L E ME N T

O A T E O F PRORATI ONS I F
D I F F E R E N T FROM S E T T L E

MENT

J.

100.

SUMMARY O F B O R R O W E R ' S T R A F A C T I O N

CROSS AMOUNT DUE FROM BORROWER:

101. Contract sales price
102. Personal property
103. Settlement charges to borrower
(from linn tt00. Si'ciinn I.)
104.
105.

fT J
V 'S N
\ O /
^

120.
200.

to
to
to
to
to
to
to

7 ft
rv zx

420.

m
C~i)

220

I
|
V ff\\
(

XU

'

510. City/town taxes
511. County toxes
512. Assessments
513.
514.
515.

(10*

BORROWER

CASH A T S E T T L E ME N T RE Q UI RE D FROM 0 R P A Y A B L E
TO BORROWER:

520.

301. Gross amount due from borrower
(from line 120)
302. Less amounts paid by or in behalf of borrower
(from line 220 )
303.

CASH
O

fQ

R EQ UI R ED f r o m ; OR

P A Y A B L E t o ; BORROWER:

\J

GROSS AMOUNT D U E TO S ELL ER

------- •—

Credits to borrower for items unpaid by seller:

T 0 T A L AMOUNTS PA ID BY OR IN B E H A L F 0 ^ - ^

300.

to
to
to
to
to
to
to

504. Existing loan(s) taken subject to
505.
506.
507.
508.
509.

S~

.

'

503. Settlement charges to seller
ffrom line l400.Srrlinn 1.1

/rh

Credits to borrower for items unpaid by seller:\
to
to
to
to
to
to
to

’

NOTE: The following 500 and 600 series sections are not
required lo be completed when this form is used lor advance
disclosure ol settlem ent c o sts prior to settlem ent.
500. RED UCTION S IN AMOUNT DUE TO S ELLER:
501. Payoff of first mortgage loon
502. Payoff of second mortgage loon

AMOUNTS P AI D BY OR IN B E H A L F O F BORROWER:

206. City/town taxes
207. County toxes
208. Assessments
209.
210.
211.
212.

S EL LER:

405. City/town taxes
406. County taxes
407. Assessments
408.
409.
410.
411.

CROSS AMOUNT DUE FROM BORROWER:

201. Deposit or earnest money
202. Principal amount of new loan(s)
203. Existing loon(s) token subject to
204.
205.

SU MMA RY O F S E L L E R S T R A N S A C T I O N

Adjustments (or items paid by seller in advance:

Adjustments for items paid by seller in advanccA
Kfo. City/town taxes
107. County taxes
108. Assessments
109.
110.
111.
112.

K.

400. GROSS AMOUNT DUE TO
401. Contract sales price
402. Personal property
403.
404.
'

(

to
to
to
to
to
to

TO T A L RED UCTION S IN AMOUNT O UE TO S EL LER:

600. CASH TO S E LL ER FROM S ETTLEMEN T:
601. Gross amount due to seller
{from line 420}
)
602. Less total reductions in amount due to
603.

’

(

)

CASH TO S E LL ER FROM S ET TLEM EN T

H U D-1 (5-75)

FEDERAL REGISTER, VOL. 40 , NO. 100— THURSDAY, MAY 22 , 1975

22462

NOTICES
PAtO FROM
BORROWER'S
FUMOS

L . SE TTLEM EN T CHARGES

. 7fi0. SALES/BROKER'S COMMISSION k a u J M 'i f c *

701

$

%

4

PAID FROM
SELLER'S
FUMOS

Total commission paid by seller
Di.iiian ol eaxisilssiM as follows:

m . S

lo

703. S

'la

701.
830. ITEMS PAYABLE IN CONNECTION <IITH LOAN.
cJ?.
,
80J.
SO-t.
ST/5.
SC5.
30r.
80S.

Leon Origination fee
Loon Discount
%
Appraisal Fee to
Credit Report to
Lender's inspection fee
Mortqaqe Insuronce application fee to
As sumption/refinancing fee
'

8I>
*11.
900. ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE.
401.
902.
903.
904.
905.

Interest from
to
Mortgoge insuronce premium for
Hozord insuronce premium for

IS
mo. to
yrs. to
Vrs. to

/dav

1000. RESERVES DEPOSITED WITH LENDER FOR:
1001. Hazord insuronco
1002 .Mortgoge insuronce
• 1003. City property toxes
1004. County property taxes
1005. Annuol assessments
100(51007.
1008..

mo. PS
mo. fS
mo. £S
mo. f$
mo. 0$
mo. 0S
mo. fiS
mo. '£%

/mo.
/mo.
/mo.
/m o .
/ mo.
/ mo.
/ mo.
/ mo.

1100. TITLE CHARGES:
1101.
110?.
llb3.
‘ 1104.
1105.
1106.
1107.
1108.
1109.
1510.
n il.
1112.
1113.

Settlement or closing fee to
Abstract or title search to
Title exominotion to
Title insurance binder to
Document preporotion to
Notary fees to
Attorney's Fees to
(inclu d e* a bo ve items iVo..*
Title insuronce to
(includes a bo ve it’m* !\’o.:
Lender's coverage $
Owner's coverage S

)
)

UNFAIR PRACTICES AND UNREASONABLE OR
UNNECESSARY CHARGES TO AVOID

•

12tt). GOVERNM ENT RECORDING AND TRANSFER CHARGES
1201.

Recording fees: Deed $

; Mortgoge S

Releases $

1300. ADDITIONAL SETTLEMENT CHARGES
1301.
13Q2.
1303.
1334.
1305.

T he law req u ires th e len d er to give you a
copy of th e com pleted advance disclosure
sta te m e n t a t th e tim e of loan com m itm ent.
In m o st circum stances th is sh o u ld be n o t
la te r th a n 12 calen d ar days before th e se ttle ­
m e n t date. N orm ally, th e lo an c o m m itm en t
an d advance disclosure occur several weeks
p rio r to se ttle m e n t. In th e case o f a long­
term com m itm ent, su c h as t h a t o b tain e d by
a buyer of a new hom e u n d e r co n stru ctio n ,
disclosure sh o u ld be m ade sh o rtly a fte r sign­
ing th e c o n tra c t to buy th e house. T ypically,
th is m ig h t be in th e ran g e o f 60 to 90 days
before se ttle m e n t.
If th e exact cost o f any s e ttle m e n t service
is n o t know n in tim e to m eet th e deadline,
th e len d er m u st provide a good fa ith e stim a te
of th e charge.
L enders are p ro h ib ite d from ch arg in g a
specific fee for th e p re p a ra tio n a n d su b m is­
sion of disclosure a n d se ttle m e n t c o sts s ta te ­
m en ts or fo r th e In fo rm atio n th e y m u s t p ro ­
vide u n d e r th e T ru th in L ending Act.
I f your c ircu m stan ces are su c h t h a t you
w an t to se ttle a n d ta k e title to y o u r new
hom e before th e len d er can m eet h is 12-day
advance disclosure deadline, you m ay sign a
w aiver of t h a t req u ire m en t. A dvance d is­
closure is in te n d e d to p ro te c t y o u r In terests,
n o t h a m p e r or delay your p lan s, so you
sh o u ld carefu lly consider before signing a
w aiver. Even if you agree to waive, HUD
R eg u latio n s re q u ire th e len d er to provide th e
disclosure sta te m e n t to you a t le a st th ree
days p rio r to th e d a te of se ttle m e n t.
E xcept in th e case of a waiver, th e lender
m u st m eet th e advance disclosure re q u ire ­
m e n t o r be liable to you fo r a c tu a l dam ages
o r $500, w hichever is g reater. I f c o u rt a ctio n
is necessary to enforce th is lia b ility , th e
len d er m ay be ordered to pay c o u rt costs an d
your a tto rn e y ’s fees a s se t by th e c o u rt if th e
len d er loses th e case. T ou w ould p ay a t ­
to rn ey ’s fees in th e e v en t t h a t you lose th e
case. A len d er w ill n o t be h eld lia b le fo r a
vio latio n if h e c an show t h a t i t w as n o t In ­
te n tio n a l a n d re su lte d from a b o n a fide error
in sp ite of m ain ten a n c e by th e len d e r o f p ro ­
cedures adopted to avoid su c h error.

Survey to
Pesl inspection lo

.

WOO. TOTAL SETTLEMENT CHARGES U n i i t e i t>n l i n r ' 103 anJ 503.

/ nm l K )

KOTE: Under certain circumstances the borrower and seller may be permitted to waive tho 12-day period which must normally
occur between advance disclosure and settlement. In the event such a waiver is made, copies o f tho statements o f waiver,
c.\eculcc/ ns provided in the regulations ol tho D e trim en t oI Housing and Urban Development. s h a ll be attached to am / made a
putt o t this lorm wAti/i tho form is used an a settlem ent statement.
HUD-t fS-TS>

ADVANCE DISCLOSURE

T he
S ettlem en t/D isclo su re
S ta te m e n t
Item izes each se ttle m e n t cost ch arg ed to
th e buyer a n d each charged to th e seller.
A dvance disclosure serves a tw o-fold p u r­
pose: (1) To provide n o tice of th e c ash you
w ill need a t se ttle m e n t a n d (2) to m ake pos­
sible “com parison shopping” of se ttle m e n t
charges so th a t you c an arran g e te rm s m o st
favorable to you. I f you d o n ’t “shop a ro u n d ”
you w ill n o t save m oney if th e same, services
are offered elsew here fo r less.
I t is im p o rta n t t o realize t h a t advance d is­
closure provides fo r e arlier a n d m ore system ­
a tic In fo rm atio n a b o u t th e costs of th e se t­

tle m e n t tra n sa c tio n s b u t does n o t affect any
c o n tra c tu a l agreem ent w hich m ay already
have been m ade betw een b uyer a n d seller.
T ry to o b ta in as m u c h of th is in fo rm atio n
as possible p rio r to signing a sales c o n tra c t
fo r th e house you in te n d to buy. Or, if th e
seller is agreeable, you m ay w an t to m ake
th e sales c o n tra c t c o n tin g e n t u p o n your a p ­
proval of th e advance disclosure sta te m e n t.
Once you have signed, you m ay n o t b e able
to rescin d th e c o n tra c t in th e e v en t t h a t you
are dissatisfied w ith som e aspect o f th e
tra n s a c tio n revealed by disclosure. I t is in
your In te re st to c o n d itio n yo u r purchase
c o n tra c t on yo u r a b ility to o b ta in a m o rt­
gage lo an on specified term s.

A p rin cip al finding of Congress in th e B eal
E state S e ttle m e n t Procedures A ct of 1974 is
t h a t consum ers need p ro tec tio n from “ * * *
u n necessarily h ig h se ttle m e n t charges caused
by c e rta in abusive p ractices th a t have de­
veloped in som e areas of th e c o u n try .” T he
p o te n tia l problem s discussed below m ay n o t
be applicable to m o st lo an se ttle m e n ts, an d
th e discussion is n o t In ten d ed to d e te r you
from buying a hom e. M ost professionals in
th e se ttle m e n t service businesses w ill give
you good service. N evertheless, you m ay save
yourself m oney o r w orry by keeping th e fo l­
low ing con sid eratio n s in m ind.
A. Ille g a l Practices. P ractices specifically
p ro h ib ite d by th is A ct fa ll in to tw o c a te ­
gories:
1.
Kickbacks. K ickbacks a n d re ferra l of
business fo r gain m o st o fte n are tie d to ­
gether, so th e law p ro h ib its anyone fro m giv­
in g o r tak in g a fee, kickback, o r a n y th in g of
value u n d e r a n agreem ent t h a t bu sin ess re ­
la te d to real e sta te se ttle m e n ts w ill be re ­
ferred to a specific person or o rganization.
T his re q u ire m en t does n o t, o f course, p re ­
v e n t ag en ts fo r len d ers a n d title com panies,
atto rn e y s, o r o th ers actu a lly p erform ing a
service in co n nection w ith th e m ortgage
lo an or se ttle m e n t tran sac tio n s, from receiv­
ing com pensation for th e ir work.
T he p ro h ib itio n is aim ed p rim a rily a t
e lim in a tin g th e k in d of a rran g e m e n t in
w hich o n e p a rty agrees to r e tu rn p a rt of his
fee in order to o b ta in a volum e of business
from th e referrin g p a rty . T he dang er is th a t
som e settle m e n t; fees can be Inflated to cover
th is ad d itio n al p a rty , re su ltin g in a h ig h er

FEDERAL REGISTER, V O L 4 0 , NO. 100— THURSDAY, MAY 22, 1975

22463

NOTICES
to ta l cost to you. F or exam ple, a title com ­
pany m ig h t pay a fee to a n o th e r p a rty for
bringing i t title in su ran ce business even
th o u g h th e o th e r p a rty perform s no w ork
a n d provides no service in co n nection w ith
issuance of th e title in su ra n ce policy. As
a n o th e r exam ple, a law yer m ig h t give a p a rt
o f h is fee to a n o th e r p a rty to th e tra n sa c tio n
in exchange fo r th e referral of business.
I t is also illegal to charge or accep t a fee
o r p o rtio n th ere o f o th e r th a n fo r services
a ctu a lly perform ed.
T here are crim in al p e n altie s of b o th fine
a n d im p riso n m en t fo r any vio lation o f th ese
provisions o f law . T h ere are also provisions
for you to recover th re e tim es th e a m o u n t of
th e fee involved or a p o rtio n th ereo f. I n any
successful a ctio n to enforce your rig h t, th e
c o u rt m ay aw ard you c o u rt costs to g eth er
w ith a fee for your a tto rn e y .
2.
T itle Companies. A no ther ab use pro­
h ib ite d by law is any re q u ire m en t by th e
hom e seller t h a t title in su ra n ce be p u rch ased
from a p a rtic u la r com pany. U nder th e law,
sellers m ay n o t require, as a co n d itio n of
sale, t h a t title in su ra n ce be p u rch ased by
th e b uyer fro m an y p a rtic u la r title com pany.
A v io latio n w ould m ake th e seller lia b le to
you In a n a m o u n t equal to th re e tim e s all
charges m ade fo r th e title Insurance.
B. Choices Open to th e Buyer and O ther
P oints to Remember. B ecause th e various
p a rtie s to th e se ttle m e n t tra n s a c tio n have
d ifferen t In tere sts, th e re w ill be m any step s
in th e process of buying a hom e w hich call
fo r c au tio n o n your p a rt. As a hom e buyer,
you have a n u m b er of choices open to you
concerning se ttle m e n t costs a n d services.
Som e p o in ts to keep in m in d a r e :
1. Understand The Role o f th e Real Estate
Broker. A lthough th e real e sta te a g en t or
broker u su a lly provides h e lp fu l advice to
you o n m an y aspects of hom e buying an d
m ay in som e areas supervise Jth e se ttle m e n t,
he n o rm ally serves as a g en t of th e seller.
W hile th e real e sta te licensing law s of m ost
S ta te s re q u ire th a t th e broker tr e a t b o th
buyer a n d seller fairly, you sh o u ld n o t ex­
p ect th e broker to re p rese n t your in te re sts
to th e exclusion of th o se of th e seller.
T he b ro k er’s basic objectives are to o b ta in
a signed c o n tra c t of sale w hich properly ex­
presses th e agreem ent of th e p a rtie s a n d to
com plete th e sale a n d e a rn a com m ission or
fee. Before you sign, m ake su re th a t th e sales
c o n tra c t correctly expresses your ag reem en t
w ith th e seller on su c h Im p o rta n t d e ta ils as
m eth o d of paying th e sales price of th e hom e,
th e tim e s e t fo r your m ove-in, a n d th e s ta tu s
of fix tu res a n d o th e r personal p ro p erty in th e
hom e.
A broker m ay recom m end t h a t you deal
w ith a p a rtic u la r lender, title com pany, a t ­
torney, or provider of se ttle m e n t services.
A lthough th is recom m endation m ay be based
on th e b ro k er’s u p -to -d a te know ledge of
ra te s a n d q u a lity of service, you sh o u ld feel
com pletely free to consider alte rn ativ es, com ­
pare ra te s a n d fees, a n d m ake yo u r own
decision o n th ese m a tte rs.
I t is u p to you to review th e docum ents
carefully. A lthough th e broker m ay offer
h e lp fu l advice, keep in m in d th a t you are
th e one who is spending th e m oney to buy
a hom e a n d are e n title d to a fu ll u n d e rsta n d ­
ing of th e costs. T he b ro k er’s p rin cip al in ­
te re st a t se ttle m e n t is to g e t th e tra n sa c tio n
closed a n d h is fee or com m ission disbursed.
2. S e ttle m en t attorneys, escrow and closing
agents. I n som e p a rts of th e co u n try , s e ttle ­
m en ts are o fte n co n d u cted by a tto rn e y s w ho
specialize in real e sta te tran sac tio n s. In o th e r
p a rts of th e cou n try , th e se ttle m e n t m ay be
conducted by a n escrow or closing a g e n t or
by th e len d er or broker. T h eir p rim ary con­
cern is orderly com pletion of all th e d etails
called for in th e sales c o n tra c t a n d in th e
m ortgage co m m itm en t.

B ecause m ortgage lenders, u n lik e borrow ­
ers, go th ro u g h s e ttle m e n t o ften , th ey o ften
will n o t be p re se n t a t th e se ttle m e n t, p re ­
ferrin g to spell o u t in d e ta il in a le tte r of
in stru c tio n to th e person c o n d u ctin g th e
closing t h a t w hich th ey expect to be done
before loan fu n d s can be released.
You, th e buyer, w ill n o t h av e a le tte r of
In stru ctio n s. You w ill 'be asked a t se ttle m e n t
to m ake a n u m b er o f decisions in a rea s w ith
w hich you m ay h av e h a d little previous ex­
perience.
Before se ttle m e n t, you sh o u ld ask th e
broker, th e se ttle m e n t a tto rn e y , o r a n a tto r ­
ney re ta in e d by you w h a t q u e stio n s w ill p ro b ­
ab ly com e up. W rite th e m dow n so t h a t you
m ay have tim e to th in k a b o u t decisions th a t
are im p o rta n t to you.
S e ttle m e n t a tto rn e y s do n o t m in d answ er­
in g your questions'—t h a t is a p a r t o f th e ir
Job—b u t a t th e sam e tim e th ey m ay n o t in ­
v ite q u estio n s. I f you h av e d o u b ts, ask q u e s­
tions. D on’t le t anyone ru s h you. T h ere are
likely to b e len g th y do cu m en ts to sign a t s e t­
tle m en t. If you o r your a tto rn e y asks, you
c an u su a lly g e t copies o f th e form s In a d ­
vance.
3. Legal representation. If you feel u n fa ­
m iliar o r u n su re w ith real e sta te se ttle m e n ts,
an d m any people do, consider h irin g your own
a tto rn e y to re p rese n t you. If you h ire a n a t ­
torney, be c e rta in th a t th e re is a cle a r u n d e r­
sta n d in g in advance a b o u t w h a t services he
is to p erfo rm a n d w h a t h is fee will be for
th o se services. Som e w ill q u o te a fla t fee,
o th e rs a n h o u rly ra te o r o n e based o n a p e r­
centage o f th e sales price. T he im p o rta n t
p o in t is t h a t you sh o u ld know In advance
how m u ch you sh o u ld expect to pay fo r h is
services. If you do n o t know a n a tto rn e y who
is well versed in real e sta te tran sac tio n s,
m any local b a r associations m ay be a b le to
refer you to one w ho is.
4. Discuss w ith lenders th e ir requirem ents
fo r se ttle m e n t services. T h e len d e r’s leg iti­
m a te b u siness In tere st is in m aking a lo an o n
term s w hich w ill provide a good yield w ith
little risk. In selecting a len d in g in s titu tio n ,
ask a b o u t re q u ire m en ts fo r p ro p e rty surveys,
appraisals, escrows fo r tax e s a n d insurance,
a n d o th e r se ttle m e n t services. Y ou m ay com ­
p a re th e se re q u ire m en ts w ith th o se o f o th e r
lenders.
Som e len d ers will give you th e discretion
to shop am ong d ifferen t providers o f s e ttle ­
m en t services. B ut, m ost len d ers deal re g u ­
larly w ith c e rta in title com panies, atto rn e y s,
appraisers, surveyors o r o th ers in w hom th ey
have confidence, a n d u su a lly w a n t to arran g e
for provision o f all s e ttle m e n t services
th ro u g h th ese p a rtie s as a convenience to th e
b u y er a n d lender. If you w ish to b a rg ain d i­
rectly to reduce ra te s for se ttle m e n t services,
discuss th is w ith various lenders.
R em em ber to com pare also th e m ortgage
In te re st ra te s a n d o th e r m ortgage term s
q u o ted by d ifferen t lenders. A len d er m ay
gain th ro u g h h ig h er m ortgage in te re st over
th e rep ay m en t term w h a t it gives up a t th e
“fro n t end'” in reducing re q u ire m en ts fo r
loan o rg in a tio n fees, d isc o u n t p o in ts a n d
o th e r o n e -tim e charges w hich m u st be paid
in cash a t se ttle m e n t. O ther fe a tu re s of
available loans sh o u ld also b e com pared as
you shop.
Peel free to select a len d er o th e r th a n th e
one recom m ended by th e b ro k er o r seller. I t
is e n tirely possible th a t you m ay find fin an c­
ing w hich is m ore ad v antageous to you.
5. T itle insurance req u ire d by th e lender
protects th e lenders. You m ay b u y a separate
owner’s t it le insurance p o licy fo r yo u r own
pro te ctio n . T itle in su ra n ce is o ften re q u ire d

to p ro te c t th e len d er a g ain st loss if a flaw
in title is n o t fo u n d by th e title search m ade
w hen a hom e is p u rchased. T he len d e r’s title
in su ra n ce policy w ill be p a id fo r by you or by
th e seller according to local custom or th e
sales c o n tra ct.

You a n d th e len d er have d ifferent in te r­
ests in th e p ro p erty you are buying, a n d
th e re are m any k in d s of title defects th a t
can tro u b le you w ith o u t crea tin g problem s
fo r th e lender. Y ou m ay b u y a se p a ra te
ow ner’s title in su ra n ce policy fo r your own
p ro tec tio n in areas w here th is policy is n o t
fu rn ish e d by th e seller as a m a tte r of c u s­
tom .
6.
T ry to m in im ize th e perform ance and
cost o f re p e titiv e o r excessive se ttle m e n t re ­
quirem ents. Som e se ttle m e n t costs are

beyond your control, su c h as governm ent
tra n s fe r charges. O th er Item s m ay be nego­
tia b le, how ever, su c h as c e rta in services
w hich th e len d er req u ires taut w hich you pay
for.
a. T itle search. T here m ay be no need for
a fu ll h isto ric a l title search “back to th e
year one” each tim e title to a hom e is tra n s ­
ferred. I f you are b u ying a hom e w hich h a d
recen tly changed h a n d s, in q u ire a t title com ­
panies a b o u t a “reissue ra te .” I f th e policy of
th e previous ow ner is available, tak e i t to a
title In su re r before se ttle m e n t. I t m ay help
you o b ta in a “reissue ra te .” G enerally th is
ra te , w hen p e rm itte d by S ta te law or re g u ­
la tio n s, allow s a re d u c tio n of th e u su a l
charge fo r a new policy if th e previous policy
was issued by th e sam e title in su re r o r by
a n o th e r re p u ta b le com pany w ith in a re ce n t
period.
T itle search re q u ire m en ts are som etim es
se t by agencies w hich in su re or g u a ra n te e th e
loan, or by investors w ho p u rchase m ortgages
o rig in a ted by o th e r len d in g in stitu tio n s. T he
len d er you deal w ith m ay n o t have discre­
tio n on e lim in a tin g or red u cin g th ese
req u irem en ts.
b. Survey. T he survey of th e p ro p e rty m ay
be sim plified a n d th e cost reduced if a fu ll
p rofessional survey was perform ed recently.
A new survey m ay n o t be needed to show th a t
no re c e n t changes have occurred w hich a f ­
fe c t th e v a lid ity of th e la s t survey. A s u r­
veyor m ay be able to avoid th e cost of a
re p etitiv e com plete survey of th e p ro p erty if
he h a s access to a re c e n t survey w hich he
c an “u p d a te .” Here again, th e re q u ire m en ts
of Investors w ho buy loans o rig in ated by your
len d er m ay lim it th e len d e r’s d iscretio n to
n eg o tiate th is p o in t.
c. S e ttle m e n t agent. S e ttle m e n t practices
vary fro m lo cality to locality, a n d even w ith in
th e sam e c o u n ty o r city . In various a rea s se t­
tle m e n ts a re co n ducted b y th e len d in g in ­
s titu tio n s , title in su ran ce com panies, escrow
com panies, re al e sta te brokers, a n d a tto rn e y s
fo r th e buyer o r seller. By in v estig atin g a n d
com paring p ractices a n d ra te s, you m ay find
t h a t th e first suggested se ttle m e n t a g e n t m ay
n o t b e th e le a st expensive. Y ou m ig h t save
m oney by tak in g th e in itia tiv e in a rran g in g
fo r se ttle m e n t a n d selecting th e firm a n d lo ­
catio n w hich b e st m eets your needs.
d. Escrows. T he R eal E sta te S e ttle m e n t P ro ­
cedures A ct of 1974 h a s placed lim its o n th e
a m o u n t of m oney w hich th e len d e r c an re ­
q u ire you to place i n escrow a t s e ttle m e n t fo r
la te r pay m en t o f p ro p erty taxes a n d
Insurance.
K now y o u r rig h ts u n d e r th is new S ection
10 provision of th e Act, a s explained in th e
n e x t C hapter.
ESCROW ACCOUNTS

Ite m 23 o n th e enclosed sam ple se ttle m e n t
s ta te m e n t form covers p aym ents y o u r lender
m ay re q u ire you to m ake to a n “escrow,”
“reserve,” o r “im p o u n d ” a cc o u n t fo r in su r­
ance prem ium s, real e sta te taxes, a n d u n p a id
assessm ents.
M any lenders re q u ire t h a t each m o n th ly
p a y m e n t o n th e m ortgage Include a m o u n ts
fo r taxes, a n d h a za rd in su ran ce. W hen a p ­
plicable, lenders w ill also collect m ortgage
in su ra n ce p rem iu m s a n d a ssessm ents payable
to hom eow ner a n d o th e r associations as well
a s to special assessm ent d istric ts. T hese

FEDERAL REGISTER, VOL. 40 , NO. 100— THURSDAY, MAY 22, T975

22464

NOTICES

fu n d s a re s e t aside each m o n th In escrow
acco u n ts a n d a re acc u m u la ted to pay th e
taxes a n d o th e r b ills w hen th e y a re due.
By law , th e a m o u n t you pay In to a n es­
crow a t se ttle m e n t m ay n o t exceed your
sh a re o f tax e s a n d in su ra n ce accrued p rio r to
se ttle m e n t, p lu s %2t h o f th e e stim a te d
a m o u n t w hich w ill com e d u e for taxes a n d
in su ra n ce in th e 1 2 -m o n th period beginning
a t se ttle m e n t. I f tax e s o r In su ra n ce costs go
u p periodically over th e life o f your m o rt­
gage, th e len d e r w ill need to collect m ore
m oney fo r th e escrow acc o u n ts to cover these
Increased costs, re su ltin g in a larg e r m o n th ly
h o u sin g p ay m en t fo r you. S hould th e se costs
d ecline periodically, th e len d er sh o u ld reduce
th e m o n th ly escrow collection accordingly.
T h e escrow service provided b y y o u r lender
is designed to m ee t ongoing expenses of
hom eow nerahip. By sp read in g p aym ents over
th e year i t e lim in a tes th e p rospect o f being
faced w ith large a n n u a l bills, p e rh ap s a t a n
in o p p o rtu n e tim e. O n th e o th e r h a n d , you
m ay w a n t to m anage your ow n p ay m en t of
taxes a n d /o r Insurance, in stea d o f paying
in to a n escrow h e ld by th e lender. D iscuss
th is p o in t w hen shopping am ong lenders. Be
aw are, how ever, th a t c e rta in escrow acco u n ts
are re q u ire d b y F ed eral re g u latio n , a n d in
som e S ta te s b y law s affecting S ta te -c h a rte re d
savings a n d lo an associations.
PREVIOUS SELLING PRICE DISCLOSURE

T he len d e r is re q u ire d by law before m ak ­
ing a co m m itm en t to finance a m ortgage on
a house, w hich w as com pleted m ore th a n 12
m o n th s p rio r to se ttle m e n t, to confirm th a t
th e seller o r h is a g e n t h a s disclosed in w rit­
ing to th e b u y er th e follow ing in fo rm a tio n :

(1) T he n am e a n d address of th e p re se n t
ow ner;
(2) T he d a te th e p roperty was acq u ired by
th e p re se n t ow ner (th e year only o f acq u isi­
tio n need be given if th e p ro p erty was
acq u ired m ore th a n tw o years previously);
an d
(3) I f th e seller h a s n o t ow ned th e pro p ­
e rty for a t le a st tw o years p rio r to th e d ate
of your lo an ap p lic atio n a n d h a s n o t used
th e p ro p erty as a place of residence, th e d ate
a n d p u rch ase price of th e la s t “ a r m ’B len g th
tra n s fe r” of th e p ro p erty , a lis t of su b seq u en t
im provem ents o th e r th a n m ain ten a n c e, an d
th e cost of th e Im provem ents.
T he purpose of th is re q u ire m en t Is to in ­
form you w h e th er th e house is being sold by
a n o w n er-o ccu p an t o r by som eone w ho h as
acq u ired th e house a n d p rep ared i t fo r re ­
sale. M any investors m ake a livelihood by
in v estin g In existing housing, m aking re ­
p a irs a n d Im provem ents, a n d reselling a t a
fa ir profit. However, abuses have occurred
In w hich only superficial re p airs have been
m ade a n d hom es have been sold a t prices
greatly in excess of th e ir values. As a buyer,
your know ledge o f th e previous selling price
m ay h elp you d eterm in e th e p re se n t value
of th e property.
T he len d e r’s o b lig atio n is considered m et
if h e receives a copy of th e w ritte n s ta te ­
m e n t fro m th e seller to you giving th e in ­
fo rm atio n described above. A t t h a t tim e,
th e len d er m ay m ake th e m ortgage loan
com m itm ent.
To back u p y o u r r ig h t to fu ll disclosure
concerning existing p roperty, an y person (or
persons) w ho know ingly a n d w illingly p ro ­

vides false In fo rm atio n o r fails to com ply
w ith disclosure re q u ire m en ts m ay be su b je ct
to crim in al p e n a ltie s of fine a n d im p riso n ­
m en t, a n d civil dam ages.
JURISDICTION OF COURTS

I f you have suffered dam ages th ro u g h vio­
la tio n s of th e B eal E sta te S e ttle m e n t {Proce­
d u re s Act of 1974 as described in th e preced­
ing pages, a c tio n m ay be b ro u g h t In th e
U n ited S ta te s D istric t C o u rt for th e d istric t
in w hich th e p ro p erty involved is located, or
In an y o th e r c o u rt o f co m p eten t ju risd ic tio n ,
w ith in one year from th e d a te o f th e oc­
cu rrence of th e violation. T o u m ay also have
rig h ts u n d e r o th e r F ederal o r S ta te laws.
TRUTH I N LENDING DISCLOSURE

A t th e tim e of advance disclosure, you will
receive a T ru th in L ending s ta te m e n t a s p a rt
of th e s ta n d a rd se ttle m e n t cost disclosure
form . T h is T ru th in L ending In fo rm atio n
w ill also ap p ear on th e sta n d a rd se ttle m e n t
s ta te m e n t given to you u p o n com pletion of
th e se ttle m e n t. T he T ru th In Lending; s ta te ­
m e n t discloses th e A nnual P ercen tag e B ate
(“APB” ) w hich you w ill pay o n your m o rt­
gage loan. T h is ra te m ay be h ig h er th a n th e
c o n tra c t in te re st ra te q u o ted on y o u r m o rt­
gage. T his is because th e c o n tra c t ra te in ­
cludes only in te re st, b u t th e APB expresses
th e to ta l finance charge in clu d in g c ertain
c re d it costs besides In te re st o n th e loan.
T h e T ru th in L ending sta te m e n t w ill also
disclose an y a d d itio n a l charges fo r "prepay­
m e n t” should you pay off th e balan ce of th e
m ortgage In fu ll before It is due.
[FB Doc.75-13261 F iled &-19-75;8:45 am ]

FEDERAL REGISTER, V O L 40 , NO. 100— THURSDAY, MAY 22, 1975

Just Released

CODE OF FEDERAL REGULATIONS
(Revised as of November 1, 1974)
Title 49—Transportation (Parts 1200-1299)___ .________ $7.55

l A C u m u l a t i v e c h e c k l i s t o f C F R is s u a n c e s f o r 1 9 7 5 a p p e a r s i n t h e f i r s t is s u e
o f t h e F e d e r a l R e g i s t e r e a c h m o n t h u n d e r T i t l e 2]

O rder from Superintendent of Documents,
United States G overnm ent Printing Office,
W ashington, D.C. 20402

t