Full text of Federal Reserve Bank of New York Circulars : 7655. Interpretation of Regulation Z

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FED ER A L RESERVE BANK
O F N E W YORK
Circular No. 7 6 5 5 "I
June 18, 197S
J

[
INTERPRETATION OF REGULATION Z

Standardized Form for the Disclosure of Real Estate Settlement Costs
To A ll State Member Banks, and Others Concerned,
in the Second Federal Reserve D istrict:

The following statem ent has been issued by the Board of Governors of the Federal Reserve
System in connection with the adoption of a new T ru th in Lending disclosure form designed to as­
sist home buyers in understanding the credit term s of their m ortgages:
The Board of Governors of the Federal Reserve System today announced the adoption of a T ruth in
Lending disclosure form to assist consumers in understanding the credit terms of home purchase transactions.
The new form will be part of a combined settlement and credit cost form developed by the Housing and
Urban Development Department, to implement the requirements of the Real Estate Settlement Procedures Act
of 1974.
The Act requires that consumers be given a Uniform Disclosure/Settlement Statement at the time of
lender commitment (but in no case less than 12 days before settlement) and again at the time of settlement
in home purchase credit transactions.
This statement will contain all information required to be disclosed under the T ruth in Lending Act. The
Federal Reserve Board prepared this part of the Statement since it is the rule-making agency under the T ruth
in Lending Act.
The new form is accompanied by instructions for its use. The form will be the third page of the Uniform
Disclosure/Settlement Statement.
The Board also published an interpretation of its Regulation Z—T ruth in Lending—in connection with
the disclosure requirement.

Enclosed is a copy of the interpretation to Regulation Z. Any questions regarding this m atter
may be addressed to our Bank Regulations Departm ent. Additional copies of the interpretation will
be furnished upon request.
As indicated in the above statement, the Real E state Settlement Procedures Act of 1974 re­
quires that consumers be given a U niform D isclosure/Settlem ent Statem ent at the time of lender
commitment (but in no case less than 12 calendar days before settlem ent) and again at the time of
settlement. This standard form developed by the D epartm ent of H ousing and U rban Development
(H U D ) includes, as the third page, a T ru th in Lending disclosure form, which was prepared by
the Board of Governors of the Federal Reserve System in its capacity as the rulem aking agency
under the T ru th in Lending Act. This form contains all inform ation that is required to be dis­
closed under the T ru th in Lending Act. A sample of the three-page statement, together with in­
structions for its use and printing, is included in the May 22, 1975 Federal Register, “Real
E state Settlement Procedures and Costs,” ( P a r t III, Vol. 40, No. 100), issued by H U D , reprints
of which are being sent with this circular to all State member banks in this D istrict, for their main
offices and branches.
In addition to the above disclosure statement, H U D has prepared a booklet entitled “Settle­
ment Costs” that you are required to provide to each person applying for a home m ortgage loan
a fte r June 20, 1975. The booklet is designed to help borrowers better understand the nature and
costs of real estate settlement services. You may obtain copies from the Superintendent of Docu­
ments, U. S, Government P rin tin g Office, W ashington, D. C. 20402.




A

lfred

H

ayes,

President.

Board of Governors of the Federal Reserve System
TRUTH IN LENDING
IN T E R P R E T A T IO N O F R E G U L A T IO N Z
Disclosures Made in Connection W ith the Real Estate Settlement Procedures Act
This interpretation is written to clarify the
application of Regulation Z to the standardized
form, including T ruth in Lending disclosures
and instructions, prescribed by the Department
of Housing and Urban Development to meet
the disclosure requirements of the Real Estate
Settlement Procedures Act. For example, the
standardized form is designed for the disclosure
of loans and credit sales, and it should be used
regardless of any differing requirements in
Regulation Z.
§226.102— Disclosures m ade in connection
w ith th e R eal Estate Settlem ent Procedures
Act of 1974.
The Real Estate Settlement Procedures Act
of 1974 (P .L . 93-533) requires the Department
of Housing and U rban Development to pre­
scribe a standardized form for the disclosure
of settlement costs, which must be given to
home buyers in transactions which involve
federally related mortgage loans. Section 4 of
the statute specifically requires that such form
include all information and data required to be
disclosed by the Federal T ruth in Lending Act.
A T ruth in Lending disclosure form (herein­
after referred to as “form” ) and instructions to
be used in completing such form have been pre­
scribed as a part of the standardized form.
Because of the unavoidable complexity inherent
in combining settlement and credit costs into
one form, the requirements relating to the use
of the standardized form differ to some degree
from the requirements imposed under Regula­
tion Z. It is the purpose of this interpretation to
eliminate any confusion as to the steps creditors
must take in complying with the T ruth in Lend­
ing disclosure requirements in completing the
form and to clarify the interrelationship be­
tween the T ruth in Lending Act and the Real
Estate Settlement Procedures Act.
Sections 226.6(b), 226.8(c), and 226.8(d)
of Regulation Z characterize credit transactions
as loans or credit sales and require differing
disclosures for each. The form is designed for
the disclosure of both credit sales and loans.
The form should be used for consumer credit
transactions subject to the Real Estate Settle­
ment Procedures Act regardless of whether the
transaction may be characterized as a loan or

a credit sale and such use shall not constitute a
violation of the T ruth in Lending Act.
Notwithstanding the provisions of § 226.8(a) (1 ), the form precludes the inclusion of the
promissory note or other instrum ent evidencing
the obligation. Notwithstanding the provisions
of § 226.6(c) (2 ), the form precludes the inclu­
sion of any inconsistent State disclosure re­
quirements. Notwithstanding the provisions of
§ 2 2 6 .8 (a), itemization and disclosure of charges
excludable from the finance charge under
§ 226.4(b) may be made on the settlement costs
portion of the combined form.
The form, when properly completed in ac­
cordance with Regulation Z and the instructions
provided with the form, constitutes compliance
with the provisions of § 226.6(a) relating to
“clear, conspicuous, and meaningful sequence”
disclosure requirements. (U nder § 226.6(a)
creditors must continue to disclose more con­
spicuously the terms “annual percentage rate”
and “finance charge” as well as making numeric
disclosures under the type size requirements
specified.) The instructions accompanying the
form permit creditors to delete inapplicable dis­
closures, to substitute more pertinent disclosures
for those presently included, to provide for ad­
ditional space or language where necessary to
satisfy full disclosure, and to make additional
disclosures not presently included where such
are required. Such permissive changes to the
form should be made in compliance with
§ 226.6(a).
The form provides for the optional disclosure
of the simple annual rate of contract interest.
The disclosure of such rate does not constitute
a violation of § 226.6(c).
The definition of “federally related mortgage
loan” provided in § 3 of the Real Estate Settle­
ment Procedures Act (12 U.S.C. § 2602) could
be interpreted as requiring settlement cost dis­
closures in transactions which are exempt under
§ 226.3. In such cases, the form need not be
provided.
The effective date of this interpretation is
June 20, 1975, which coincides with that of the
Real Estate Settlement Procedures Act.
(Interprets and applies 12 C.F.R. 226.4, 226.6, and 226.8)

By order of the Board of Governors, May 5,
1975.

[Enc. Cir. No. 7655]




PRINTED IN NEW YORK

Federal Register, May 22, 1975
C O R R E C T I O N

Please note that there is a technical
Register reprint. The samples of HUD Form 1 on
he reversed, since the sample on page 22^55 has
correspond with the accompanying explanation of




error in the enclosed Federal
page 22^+55 and page 22^62 should
numbered settlement costs that
each item on page 22 U 60 .

Circulars Division
Federal Reserve Bank of New York




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 TH E
SECRETARY
[D o c k e t N o. R 7 5 —3 1 8 ]

PART 82— REAL ESTATE SETTLEMENT
PROCEDURES
O n F eb ru ary 18, 1975, 40 F R 7072,
the D ep artm e n t published a notice of
proposed ru lem ak in g which would am end
S u b title A by ad d in g a new P a r t 82. T h is
p a r t im plem en ts sections 4, 5 a n d 6 of
th e R e a l E sta te Settlem en t Procedures
A ct o f 1974, 12 U .S.C . 2601, which p ro ­
vide fo r a settlem en t cost statem en t
form , a sp ecial in form ation booklet to be
distrib u ted a t tim e of loan app lication ,
an d a n item ized disclosure of each ch arge
a risin g in connection w ith each se ttle ­
m ent t h a t involves a fed erally related
m o rtg ag e loan tran sactio n . A general n o ­
tice p rescrib in g the tex t of the sp ecial
in fo rm atio n booklet is being published
con cu rren tly with the regulations. Th e
fin al version s of the u n iform disclosure
se ttle m en t statem en t, an d the T ru th in
Len d in g sta te m e n t which is a p a rt of it,
a re included a s A ppendices A an d B of
th e regu lation s. T h e u niform disclosure
settlem en t statem en t is required by se c ­
tio n 4 of the A ct to include the in fo rm a ­
tion an d d a ta required fo r relevan t
tra n sa c tio n s u nder the F ed eral T ru th in
Len d in g A ct an d the regulation s issued
th ereu n d er by the F ed era l R eserve
B o ard . On M arch 24, 1975, (40 F R 13008)
th e B o ard published a proposed sta n d a rd
T ru th in L endin g S ta te m e n t to sa tisfy
the requ irem ents of th e Act. T h e B o a r d ’s
fin al revision of the fo rm an d in stru c­
tio n s are included in these regulation s as
A ppendix B . As a resu lt of the in vitation
fo r public com m ent con tain ed in the n o­
tice fo r ru lem aking, m ore th a n 500 re ­
sp on ses h ave been received. T h e D e p a rt­
m en t h a s considered each com m ent c a re ­
fully an d a s a re su lt h as adopted certain
ch an ges in both the regu lation s an d the
accom p an y in g form , a s they were p ro ­
posed. T h e prin cipal ch an ges are a s
fo llo w s:
G eneral C o m m en ts

A n um ber of com m ents objected to the
overall concept of the Act, argu in g th a t
the con d uct of re a l esta te tran sactio n s
w as essen tially a local m atter, th a t u n i­
form ity in fo rm s w as im practical, th a t
ad v an ce disclosu re would n ot be o f a s ­
sista n ce to consum ers, an d th a t the p ro ­
cedures required by the Act would add
to paperw ork an d co sts o f lend v s an d
providers of settlem en t services.
C o v era g e

N um erous com m ents requested th a t
the scope of coverage be defined. T h e
fin al regu latio n s provide th a t they apply
to cases involving a p u rch ase or tra n sfe r
of property. R efin an cin gs, ju n io r m o rt­
gages, consum er borrow ings, an d oth er
ca ses in which th ere is no tra n sfe r of
title to the re a l e sta te are n ot covered.
T r a n sfe rs in which a n existin g loan is
assu m ed or taken su b je c t to are covered
only if the loan term s a re m odified or




fin al regulation s clarify the term , so th a t
gen eral ad v ertisin g would not be re ­
gard ed a s a loan com m itm ent. On the
other h an d, su ggestion s th a t the term
be confined to w ritten com m itm ents were
not adopted, since u nder su ch a rule,
lenders m igh t in som e cases forego giv­
ing w ritten com m itm ents.
N um erous com m entators believed th a t
the lender or its em ployees were required
to p rep are a n d tra n sm it the advan ce d is­
closure. T h e fin al regu lation s h ave been
clarified to p erm it the lender either to
do such work itself or to cau se it to be
done by som e other p arty , su ch a s a title,
settlem en t, or escrow com pany or a law ­
yer. However, under the A ct (section
6 (b )) the lender rem ain s responsible.
Som e com m ents raised questions con­
cern in g the degree of efforts which the
lender or other person p rep arin g the a d ­
van ce disclosure m u st exert to determ ine
the ch arges to be m ade fo r variou s se rv ­
ices. I f no provider of a p articu la r service
h a s been selected fo r the tra n sa ctio n a t
the tim e of disclosure, the lender m ay
m ake a n estim ate b ased on its knowledge
of gen eral p ractices in the area. I f a
provider h a s been selected, th a t provider
sh ould be co n tacted an d ask ed w hat his
fee will be, unless th e lender alread y
knows the provider’s schedule of fees
an d reason ab ly expects th a t schedule to
be followed in the p resen t case.
A dvance disclosure of p roration s of
ta x e s an d a ssessm e n ts m ay be based on
estim ate s if ex act figures are n ot a v a il­
able. Su ch adv an ce disclosure m ay be
b ased on the assu m ption th a t no ta x e s or
assessm e n ts are delinquent.
A num ber of com m ents ask ed if the
advan ce disclosure m u st be reissu ed if
m ore in form ation ab ou t settlem en t
ch arges become availab le to th e lender
a fte r the in itial disclosure but prior to
settlem en t. U nder the fin al regulations,
reissu an ce of the adv an ce disclosure is
not required.
Som e com m ents pointed out th a t the
reten tion -o f-records requirem ents in the
proposed regulation s were not clear an d
were not iden tical to the requirem ents
fo r T ru th in L endin g statem en ts. U nder
the fin al regulations, copies of the a d ­
vance disclosure an d the settlem en t
statem en t m u st be retain ed by the lender
fo r two y ears, excep t where the loan
file is tran sferred , an d copies m u st be
A dvance D is c l o s u r e
su bm itted to the D ep artm en t upon re ­
T h e adv an ce disclosure required by quest. T h is requirem ent will enable the
the Act m u st be m ad e a t lea st 12 days D ep artm en t to fulfill its sta tu to ry duty
prior to settlem en t unless the 12-day under section 14 o f the A ct to stu d y an d
period is waived. M any com m ents re ­ in vestigate settlem en t co sts an d to report
quested t h a t a period sh orter th an 12_ to C ongress thereon.
days be m ad e sta n d a rd , but section 6 (a )*
T h e proposed regulation s required the
of the Act does not leave th is m a tte r to sig n atu re s of the borrow er an d the seller
the D ep artm e n t’s discretion.
on the advan ce disclosure statem en t, and
In general, adv an ce disclosure m u st be several com m ents objected to th is p roce­
given not la te r th an 7 d ay s a fte r the date dure or requested clarification . In the
of the loan com m itm ent. In cases in
fin al regu lation s all requirem ents fo r
which a loan com m itm ent is m ade m ore sign atu re on eith er the advan ce d is­
th a n 60 d ay s before the an ticip ated date closure or the settlem en t statem en t have
of settlem en t, the disclosure m ay be been dropped.
given la te r th a n the loan com m itm ent,
M ailin g of the advan ce disclosure is
but n o t less th an 60 d ay s prior to se ttle ­ perm itted by the fin al regulations, but
in certain cases the app licab le tim e lim its
m ent.
M any com m ents ask ed fo r a cla rific a ­ are 3 days earlier where adv an ce d is­
tion o f the term “ loan com m itm en t” . Th e closure is m ailed.

the lender im poses ch arges exceeding
$50.
T h e geograp h ical coverage of th e p ro ­
posed regu latio n w as unclear, a s several
com m ents pointed out. T h e fin al re g u la­
tions app ly to all territories an d p o sses­
sion s of the U nited S ta te s in addition to
the co n tin en tal U nited S ta te s an d Puerto
Rico.
Sev eral com m ents requested th a t ex ­
clusion s be m ad e fo r agricu ltu re property
a n d fo r builders or developers. In re ­
spon se to th ese com m ents, the fin al
regu lation s do n ot apply to real estate
p u rch ased fo r the purpose of resale to a
cu stom er in the ordin ary course of b u si­
ness. Th e fin al regulation s app ly to m o rt­
gages covering a g ricu ltu ral properties.
A lthough n um erous com m ents requested
th a t the regu latio n s n ot app ly to corpo­
ration s, p artn ersh ip s, an d other b u siness
en tities, su ch an exclusion w as not m ade
an d does not a p p ea r to be perm issible.
Sev eral com m ents ask ed th a t sa le s of
v a ca n t la n d be exem pted from the regu ­
lation s. T h e fin al regu lation s exem pt
such lan d u n less the proceeds o f the
loan involved in the tra n sa ctio n are to
be used, in whole or in p art, to finance
the construction of a dwelling. Sev eral
com m ents requested clarificatio n of the
coverage of m obile hom es. T h e fin al reg­
u lation s cover m obile hom es an d mobile
hom e lots only if both the m obile hom e
an d the lot on which it is to be located
are being p u rch ased with the proceeds
of the loan in question.
I t w as su ggested th a t the effective date
of the regu lation s be extended beyond
Ju n e 20, 1975, in order to perm it m ore
tim e fo r the person s who m ust im plem ent
the A ct to stu d y it, p rep are form s, and
tra in th eir personnel. Section 19 of the
Act does n ot give the D ep artm en t d is­
cretion in this regard.
In response to num erous requests, the
fin al re gu latio n s provide th a t len ders
m ay, w ithout sp ecial approval, place
their own covers on the sp ecial in fo rm a­
tion booklets which m u st be given to loan
ap p lican ts. O ther lim ited ch an ges are
perm itted, a s se t fo rth in the fin al regu ­
latio n s or a s approved by the S ecretary .
Len d ers m ay tra n sla te the booklet into
other lan g u a g es fo r the benefit of their
cu stom ers, w ith the app rov al of the
Secretary .

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2, 1975

RULES AND REGULATIONS
W a iv e r o f A d v a n c e D i s c l o s u r e

F o rm D e s ig n

Sev eral com m ents requested c la rific a ­
tion w hether a seller o r borrow er can
bind the other by a waiver. T h e fin al
regulation s specify th a t each p arty who
h a s not received tim ely ad v an ce disclo­
su re w aives th is righ t, so th a t one p arty
can n o t waive fo r the other.
N um erous com m ents ob jected to the
sh ortn ess of th e 18-day period processin g
rule. T h e fin al regu lation s extend th is
period to 21 days. T h e fin al regulation s
provide t h a t ad v an ce disclosure m ay be
m ade prior to com m itm ent. T h is will en ­
able lenders, by m ak in g ad v an ce disclo­
su re before com m itm en t a s to loans re ­
quiring speedy settlem en ts, to be able to
hold settlem en t on su ch lo an s a s soon a s
the com m itm ent is issued.
Som e com m ents ob jected to th e 3-day
advan ce disclosure requirem ent in the
proposed regulations. T h e provisions in
the fin al regu lation s a s to w aiver tak e
into accoun t the exp ress directions in
the A ct th at, in its prescrib in g o f the
w aiver regulation s a n d form , th e S e c re ­
ta ry sh ould tak e in to acco u n t the need
to p rotect the borrow er’s an d se lle r’s
righ t to tim ely disclosure.
In keeping with the A ct, th e fin al regu ­
lation s require t h a t the adv an ce disclo­
su re be received by th e p artie s on o r be­
fore the tim e o f th e loan com m itm en t
but not less th a n 3 d a y s p rio r to se ttle ­
m ent in an y w aiver situ ation .
A num ber o f com m ents pointed ou t
th a t the execution o f th e w aiver by the
lender served n o purpose a n d th is re ­
quirem ent w as om itted in th e fin al re g u ­
lation s. Sim ilarly , th e w itness lin es a re
om itted from the w aiver form .

M any com m ents requested flexibility
in th e design of the form . T h e final
regu lation s allow som e degree of flexi­
bility. A dditional item s describin g com ­
m on local ch arges m ay be inserted in
blan k sp aces on th e form . T h e sp acin g
betw een lines m ay be in creased fo r com ­
p u ter p rin tin g, a n d the lender or se ttle ­
m en t agen t m ay add a firm n am e or
logotype to th e title block. S ig n a tu re
lines m ay be added.
N um erous com m ents objected to the
num ber of su b to tals which the proposed
form required. T h ese have been largely
elim in ated in the fin al version. T h e “ d is­
b u rsem en ts” colum n h a s also been
elim inated, sin ce n early all com m ents
which discussed it th ou gh t th a t it would
con fu se consum ers.
A la rg e num ber of com m ents requested
th a t se p a ra te form s be provided fo r b o r­
rower an d seller. T h e fo rm w as rede­
sign ed so th a t se p a ra te su m m aries of the
borrow er’s an d se lle r’s tra n sa ctio n s a p ­
p ear on p ag e 1, b u t the in form ation on
p ag e 2 m u st be provided to both b or­
row er an d seller, a s required by the Act.
T h e in stru ction s p erm it the lender or
settlem en t a g e n t to send a copy o f the
form to the borrow er with th e seller’s
su m m ary le ft blank, an d sim ilarly to
send a copy to the seller with the b or­
row er’s su m m ary le ft blank.
A la rg e num ber of com m ents objected
to inclusion in th e adv an ce disclosure
of the liens a n d ch arges a g a in st the
seller’s la n d ; these com m ents asserte d
th a t su ch in form ation would n ot be
availab le until a title se arch w as com ­
pleted an d payoff letters from existin g
len ders were obtained, an d th a t the
am ou n ts could n ot theretofore be e sti­
m ated in an y m ean in gfu l way. T h e D e­
p artm en t believes th a t th is view is co r­
rect, an d the fin al in struction s to the
form p erm it the portions d ealin g with
these m a tte rs to be le ft blank when the
form is used fo r adv an ce disclosure. T h is
m ean s th a t in m ost cases the advan ce
disclosure will n ot in d icate to the seller
th e am ou n t o f cash he can expect to
realize from the tran sactio n . However,
th e portions of th e fo rm sum m arizing
the buyer’s tran sactio n m u st be com ­
pleted when the form is used fo r advan ce
disclosure, th u s in d icatin g to the buyer
the am ou n t of cash he will need to com ­
plete settlem ent.
T h e D ep artm en t h a s determ ined th is
rule does n ot h ave sign ifican t im p act on
the environm ent an d a finding of in a p ­
plicability h a s been p rep ared p u rsu a n t
to H U D H andbook 1390.1. A copy of th is
fin din g is availab le during re gu lar b u si­
n ess hours fo r public inspection in the
Office o f the R u les D ocket Clerk, Office
of G en eral Counsel, R oom 10245, D e­
p artm en t of H ousing an d U rb an D evel­
opm ent, 451 7th S tre e t SW ., W ash in g­
ton, D.C. 20410.
A ccordingly, S u b title A of T itle 24 is
am ended by ad o p tin g a new P a r t 82—
R eal E s ta te S ettlem en t P rocedu res to
re ad a s follow s:

S ettlem en t S tatem ent

M any of th e com m ents in d icated a
lack o f u n d erstan d in g o f th e relation sh ip
between the ad v an ce disclosu re form an d
the settlem en t statem en t. A lthough the
sam e b asic fo rm a t is u sed fo r both, it is
perm issible fo r len ders to p rin t such
fo rm s se p arate ly a n d to p lace titles on
them accordingly. T h e official version
published in these fin al regu lation s ca n
be used fo r both p urposes by checking
the ap p ro p riate sq u are n e a r th e top o f
th e form . O rdin arily som e o f th e en tries
on th e settlem en t sta tem en t will differ
from those on the ad v an ce disclosu re (be­
cau se som e ch arges a re d ifferen t th an
estim ated, or because th e d a te o f actu al
settlem en t is different from th e d ate e sti­
m a te d ). T h e fin al re gu lation s specify
th a t copies o f the settlem en t statem en t
m u st be provided to th e buyer a n d seller
a s soon a fte r settlem en t a s p racticab le,
an d in no ca se la te r th a n th ree d ay s a fte r
settlem ent.
W hen ch arges a re p aid directly by the
borrower o r seller, ra th e r th a n p aid
through th e settlem en t agen t, som e com ­
m ents ask ed w hether it would be n eces­
sary to show them on th e form s. T h e fin al
regulation s provide sp ecial ru les fo r h a z ­
a rd in suran ce ch arges, a tto rn ey ’s fees
an d ch arges fo r ce rta in o th e r services
independently procured by the borrower
or seller.




22449
PART 82— REAL ESTATE SETTLEMENT
PROCEDURES
Sec.
8 2 .1
8 2 .2
8 2 .3

8 2 .8
8 2 .9
8 2 .1 0

A u th o rity , sc o p e a n d p u rp o se .
D e f in itio n s .
R e lia n c e u p o n r u le , r e g u la tio n s o r i n ­
te rp re ta tio n b y H U D o f R E SPA .
A p p lic a b ility .
I n fo r m a tio n b o o k le t f o r p e rs o n s a p ­
p ly in g fo r lo a n s t o p u r c h a s e r e s i­
d e n tia l re a l p ro p e rty .
U n ifo rm D is c lo s u r e /S e ttle m e n t S ta te ­
m e n t F o rm .
A d v a n c e d is c lo s u re o f s e tt le m e n t c o s ts
b y le n d e r.
U n ifo rm S e ttle m e n t S ta te m e n t.
M a ilin g .
N o fee .

82.11

R e l a ti o n t o S t a t e la w s .

8 2 .4
8 2 .5

8 2 .6
8 2 .7

A u t h o r it y : R e a l E s t a t e S e t t l e m e n t P r o c e ­
d u r e s A c t o f 1 9 7 4 , P u b . L . 9 3 - 5 3 3 (1 2 U .S .C
2 6 0 1 ).

R e g u l a t io n X

§ 82.1

Authority, scope and purpose.

T h is p art, which m ay be referred to
a s R egu lation X , com prises the re g u la ­
tio n s issued by the S e c re ta ry o f H ousing
an d U rb an D evelopm ent p u rsu an t to the
R e a l E sta te S ettlem en t P rocedu res Act
o f 1974 (Pub. L. 93-533), 12 U .S.C . 2601,
herein “ R E S P A ” . T h is p a r t app lies to
certain 1 to 4 fam ily m o rtgages, defined
a s “ H om e M o rtgages" in th is p art.
R E S P A S ection 4 (U n iform Settlem en t
S ta te m e n t) au th orizes an d d irects the
S e c re ta ry to prescrib e a u n iform se ttle ­
m ent statem en t to be used in the se ttle ­
m ent o f H om e M ortgages. R E S P A S e c ­
tion 5 auth orizes a n d d irects the S e c re ­
ta ry to prescrib e sp ecial in form ation
booklets to be provided by the Lender
to each p erson borrow ing m oney to fi­
n an ce the p u rch ase of ce rtain resid en tial
re a l e sta te tra n sa ctio n s so th a t h e or sh e
m ay b etter u n d erstan d the n atu re an d
co sts o f re al e sta te settlem en t services.
R E S P A S ec tio n 6 au th orizes an d directs
the S e c re ta ry to prescrib e the form an d
im plem en tin g regu latio n s by which every
Lender, with resp ect to a H om e M o rt­
gage su b je ct to S ec tio n 6, sh a ll disclose
in advan ce o f settlem en t every ch arge
a risin g in connection w ith the se ttle ­
m ent. R E S P A S ection 12 p roh ibits im ­
position by a len der o f a fee fo r or on
accoun t of p rep arin g an d su b m ittin g the
sta tem en ts required by S ection s 4 an d
6 or by th e T ru th in L endin g A ct, 15
U .S.C . 1601 et seq. R E S P A section 18(a)
auth orizes the S e c re ta ry to determ ine
w hether sta te law s w ith resp ect to se ttle ­
m ent p ractices a re in con sisten t w ith any
provision of R E S P A . S ectio n 18(b) p ro ­
vides th a t no provision of R E S P A or of
the law s o f a sta te sh a ll app ly to an y ac t
done or om itted in good fa ith in con­
form ity w ith an y rule, regulation, or in ­
terp re tatio n th ereof by the S ecretary .
§ 82.2

D efinitions.

F o r p urposes o f th is p a rt, the follow ­
ing definitions apply, unless the context
in d icates otherw ise.
(a)
“ A ssum ption A pproval” m e an s the
ap p rov al by th e Len d er o r his duly a u ­
thorized agen t or represen tativ e of a n
assum ption of, or a sa le su b je ct to, a
H om e M ortgage where such ap p rov al is

FEDERAL REGISTER, VO L. 4 0 , NO. TOO— THURSDAY, M AY 2 2 , 1975

22450

RULES AND REGULATIONS

conditioned o r b ased u pon a ch an ge in nection w ith the p u rch ase of or tra n sfe r
the in terest ra te or oth er term s an d co n ­ of title to the m o rtgaged property;
(2) T h e loan is secured by a lien on
dition s of th e prom issory note or docu­
m ent creatin g th e m o rtgage lien, or is or other secu rity in terest in real estate,
m ad e in co n sid eration of th e p ay m en t of including a fee sim ple, life estate , re­
a fee in excess o f fifty d o llars ($50) p aid m ain d er in terest, or leaseh old estate,
to th e Len d er or h is agen t, re p re se n ta ­ upon which there is located a stru ctu re,
including a m obile hom e owned or to be
tive or servicer.
(b) “ D a te o f Settlem en t” m eans, in owned by the borrow er an d covered or
the c a se of a sa le or tra n sfe r fin anced to be covered by the m ortgage, designed
by a new m ortgage, th e d ate on which prin cipally fo r the occupancy of fro m
the docum ents crea tin g th e m ortgage 1 to 4 fam ilie s or upon which such a
becom e effective a s betw een th e borrow er stru ctu re is to be constructed, or p u r­
a n d th e Lender, an d in the case o f a p u r­ ch ased in the case of a m obile hom e, u s­
c h a se of a p rop erty su b je ct to a n e x ist­ ing p a rt or all o f the proceeds of the
ing m o rtgage, w hether or n ot the buyer loan, or th e loan is secured by a lien
a ssu m es p erson al liability, the d ate on or other secu rity in terest covering a 1
w hich title is tra n sferred a s betw een to 4 fam ily resid en tial condom inium unit,
seller an d buyer n ot su b je ct to revocation or the lo an is secu red by a pledge of
cooperative stock or in terest correspon d­
by seller o r buyer.
(c) “ D a y s” a re com puted a s follow s: ing to a 1 to 4 fam ily resid en tial coopera­
All tim e periods in th is p a r t a re e x ­ tive u n it;
(3) T h e M o rtgaged P roperty is located
p ressed in days. P eriods do n ot include
the d a y fro m w hich they a re m easured. in a S t a te ; an d
(4) T h e loan is m ade by a F ed eral
W here th e la s t d ay on w hich an a c t or
even t is p erm itted to occur is a S a tu rd a y , Len d er, or is m ad e in whole or in p art,
S u n d ay or F e d e ra l o r S ta te holiday, such or insured, gu aran teed , supplem ented, or
a c t or even t m ay occur on the n ext su c ­ a ssiste d in an y way, by the S ec retary
ceeding d ay which is n ot a S a tu rd a y , or an y other officer or agen cy o f the
Su n d a y or F e d e ra l o r S ta te holiday. F ed era l G overnm ent, or is m ade in con­
W here a period is 7 d ay s or m ore, it is nection with a housin g or u rb an devel­
m easu red in ca len d a r days. W here a p e­ opm ent p ro gram adm in istered by the
riod is less th a n 7 d ay s an d not specified S e c re ta ry or other agency o f the F ed eral
a s calen d ar days, it is m easu red in b u si­ G overnm ent, o r is eligible fo r p u rch ase
n ess day s, excludin g S a tu rd a y s, S u n d ay s by the F ed eral N atio n al M ortgage A s­
so ciation (F N M A ), the G overn m ent N a ­
a n d F e d e ra l or S t a te holidays.
(d) “ F ed eral L en d er” m e a n s: (1) A tio n al M ortgage A ssociation (G N M A ), or
len ding in stitution , the deposits or a c ­ the F ed era l H om e L o an M ortgage C or­
co u n ts o f which a re insured by th e F e d ­ p oratio n (F H L M C ). N ote th a t G N M A ’s
eral S a v in g s an d L o an In su ran ce C or­ au th ority to p urch ase m o rtgages includes
p oratio n (F S L I C ) , the F e d e ra l D eposit b road au th ority undor 12 U .S.C. 1720(a)
In su ran ce C orp oratio n (F D IC ) or any “ to p u rch ase such types, classes, or c a te ­
oth er agen cy of the F ed eral G overnm ent, gories of hom e m o rtg a g e s” a s the P re si­
or (2) a len ding in stitu tion which is re g ­ dent sh all determ ine to carry out the
u lated by th e F e d e ra l H om e L o an B a n k p urposes of 12 U .S.C . 3 0 1 (b ).
(f) “ L e n d er” m ean s, in th e case o f a
B o a rd or an y other agen cy o f the F ed eral
G overnm ent, or (3) a “ cred itor,” a s de­ new loan, the secu red creditor or cred­
fined in section 103(f) of the C onsum er ito rs n am ed a s su ch in the debt o b liga­
C red it P rotection A ct (15 U .S.C . 1602 tion an d docum ent creatin g the lien or
( f ) ) , who m ak es o r m ad e new in vest­ other secu rity in terest, an d in the case
m en ts in resid en tial real esta te lo a n s a g ­ of a n A ssum ption A pproval with resp ect
gre g a tin g m ore th an $1,000,000 in either to a p reexistin g loan, the cu rren t owner
the calen d ar y ear in which the D ate of or ow ners of the H om e M ortgage a t the
Settlem en t o f the H om e M ortgage in tim e of the A ssum ption Approval.
(g) “ L o an A pp lication ” m eans an oral
question occurs or the calen d ar y ea r prior
thereto. Section 103(f) defines “ cred ito r” or w ritten ap p lication fo r a H om e M ort­
gage or A ssum ption A pproval received by
a s follo w s:
the Len d er or h is agen t or representative
(f) T h e te rm
“c r e d ito r ” re fe rs o n ly to
or independent co n tracto r origin atin g
c re d ito r s w h o re g u la rly e x te n d , o r a rr a n g e
the H om e M ortgage in the n am e of the
fo r th e e x te n s io n o f, c r e d it f o r w h ic h th e
L en d er or servicing the H om e M ortgage
p a y m e n t o f a f in a n c e c h a r g e is r e q u i r e d ,
fo r the Lender. T h e d ate o f L o an A ppli­
w h e th e r i n c o n n e c tio n w ith lo a n s , s a le s o f
p r o p e r ty o r s e rv ic e s , o r o th e rw is e . T h e p r o ­
cation is the d a te of a ctu al receipt.
v is io n s o f t h is t it le a p p ly to a n y s u c h c re d ­
(h) “ L o an C om m itm ent” m ean s a
ito r , irr e s p e c tiv e o f h is o r its s ta t u s a s a
prom ise by a Lender to a borrower, oral
n a tu r a l p e rs o n o r a n y ty p e o f o rg a n iz a tio n .
or w ritten, to m ak e a H om e M o rtgage or
(e) “ H om e M o rtgage” m ean s a loan A ssum ption A pproval, w ith resp ect to a
which is n ot m ade to fin ance a n exem pt specified property, w hether or n ot such
tra n sactio n under section 82.4(b) an d prom ise is su b je c t to any conditions an d
which m eets all of the follow ing fo u r re ­ w hether or n ot th e borrow er is obligated
qu irem en ts:
to accep t su ch H om e M ortgage or A s­
(1)
T h e proceeds of the loan are usedsum ption A pproval.
in whole or in p a r t to fin an ce the p u r­
(i) “ M ortgaged P rop erty ” m ean s the
ch ase by the borrow er, o r other tra n sfe r re al property covered by the H om e M ort­
of title, of th e m o rtgaged p rop erty o r th e gage, or th e cooperative un it w ith re ­
lo an w as previously m ad e an d the lender sp ect to which stock is pledged to secure
m ak es an assu m p tion ap p rov al in con ­ the H om e M ortgage loan.




( j) “ P erso n ” m ean s an y individual,
corporation , p artn ersh ip , tru st, a sso c ia ­
tion or other entity.
(k) “ R E S P A ” . T h e R e a l E sta te S e t ­
tlem en t Procedu res A ct o f 1974 (Pub. L.
93-533), 12 U .S.C . 2601, a s am ended.
(1)
“ S e c re ta ry .” T h e S ec retary of
H ousing an d U rb an D evelopm ent or any
official delegated th e au th ority o f the
S ec retary w ith resp ect to R E SP A .
(m ) “ S t a te ” m eans any S ta te of the
U nited S ta te s, the D istrict of Colum bia,
th e C om m onw ealth o f P u erto Rico, an d
any territory o r p ossession o f th e U nited
S ta te s.
§ 8 2 .3 R elian ce u p on ru le, regu lation or
in terp retation by H U D o f RESPA .

(a ) Section 18(b) of R E S P A provides:
N o p ro v is io n o f t h i s A c t o r o f t h e la w s o f
a n y S ta te im p o s in g a n y lia b ility s h a ll a p p ly
to a n y a c t d o n e o r o m itte d in g o o d f a ith in
c o n fo r m ity w ith a n y r u le , re g u la tio n , o r i n ­
te r p r e ta tio n th e re o f b y th e S e c re ta ry , n o t­
w i t h s t a n d in g t h a t a f t e r s u c h a c t o r o m is s io n
h a s o c c u rre d , s u c h ru le , r e g u la tio n , o r i n ­
te r p r e ta tio n is a m e n d e d , re s c in d e d , o r d e ­
te r m in e d b y ju d ic ia l o r o th e r a u th o r ity to b e
In v a lid fo r a n y re a s o n .

(b) F o r p urposes of section 1 8 (b ), only
th e follow ing co n stitu te a “ rule, re g u la ­
tion, or in terp retatio n th ereof by th e
S e c re ta ry ” :
(1) Th e U niform D isclo su re /S e ttle ­
m ent S tate m e n t, H U D F orm 1, an d H UD
in stru ction s se t fo rth in A ppendix A, but
not including p ag e 3 of the form a n d the
F ed eral R eserve B o ard in struction s
thereto, se t fo rth in A ppendix B ;
(2) All other provisions a n d A ppen ­
dices contain ed in th is p art, bu t n ot in ­
cluding any docum ent referred to in th is
p a r t except to th e exten t su ch docum ent
is se t fo rth in th is p a r t; an d
(3) E a c h fo rm al legal opinion re g a rd ­
ing R E SP A , design ated a s a “ R E S P A
L egal O pinion,” num bered a n d dated, by
the G en eral C ounsel of th e D ep artm en t.
(c) A “ rule, regulation, or in te rp re ta ­
tion thereof by th e S e c re ta ry ” fo r p u r­
poses of R E S P A section 18(b) sh all not
include the Sp ecial In fo rm atio n B o o k ­
let prescribed by the S ecretary or any
oth er statem en t or issuance, w hether
oral or w ritten, by a n officer o r rep re­
sen tative of HUD, letter or m em oran dum
by th e Secretary , G en eral Counsel, any
A ssista n t S ecretary or other officer or
em ployee o f HUD, pream b le to a re g u la ­
tion or other issu an ce o f HUD, report to
C ongress, pleading, affidavit or other doc­
um en t in litigatio n , p am ph let, handbook,
guide, telegraph ic com m unication, e x p la ­
nation , in stru ction s to form s, speech or
other m ateria l of any n atu re which is
n ot specifically included in p a rag ra p h
(b) o f th is section.
§ 8 2 .4

A p plicab ility.

(a )
Transactions covered. T h is p art
app lies to loan s which con stitute Hom e
M ortgages a s defined in § 8 2 .2 (e ). As d e­
fined therein, H om e M ortgage does n ot
include a hom e im provem ent loan or
other loan secured by a lien on a 1 to 4
fam ily residen tial property where the
proceeds o f the loan are n o t used to
fin ance th e p urch ase or tra n sfe r o f the
property. Nor does H om e M ortgage in-

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS
elude refin ancin g of a m o rtgage loan
secured by a lien on a 1 to 4 fam ily
residen tial p rop erty w here there is no
tra n sfe r of title.
(b) Exempt transactions. T h is p a r t
sh all n ot apply to p u rch ases of property
for resale in the ordin ary course of b u si­
ness.
(c) Commencement of applicability —
(1) Information booklet. T h e S p ecial I n ­
form ation Booklet m u st be distrib u ted
with resp ect to every L o an A pplication
received on or a fte r Ju n e 20, 1975.
(2) Advance disclosure. A fter Ju n e 20,
1975, adv an ce disclosure, a s required by
§ 82.7 of th is P art, m u st be provided with
respect to every H om e M ortgage except
a H om e M ortgage (i) which is m ade p u r­
su a n t to a L o an C om m itm ent evidenced
by a letter or w ritten agreem en t sign ed
by the Lender prior to Ju n e 20, 1975, an d
(ii) a s to which the D a te of Settlem en t
occurs on or before O ctober 20, 1975.
W here advan ce disclosure is required, it
m ay be m ad e prior to Ju n e 20, 1975.
(3) Settlement statement. T h e U n i­
form D isclo su re/S ettle m e n t S ta te m e n t
sh all be used a s the settlem en t statem en t
with respect to every H om e M ortgage
su b ject to the advan ce disclosure re ­
quirem ents p u rsu an t to p a ra g ra p h (c)
(2) of th is section.
§ 8 2 .5 In form ation b ook let fo r persons
ap p lyin g for loan s to p u rchase resi­
dential real property.

Lender to provide information
booklet. Every lender sh a ll provide a copy
(a)

of the Sp ecial In fo rm atio n B ooklet c u r­
rently prescribed by the S ecretary to
every person who m akes a loan a p p lic a ­
tion. W here m ore th an one individual
m akes a loan app lication , the lender is
required to supply a copy of the S pecial
In fo rm atio n Booklet to a t le a st one of
the individuals applyin g. T h e lender
sh all supply the Sp ecial In fo rm atio n
Booklet *by delivering it to or p lacin g it
in the m ail to the a p p lic an t n ot la te r
th an the th ird bu siness day of the lender
follow ing the day on which th e a p p lic a ­
tion is received.
(b) Printing and duplication. T h e S p e ­
cial In form ation Booklet m ay be ob­
tain ed from the Su p erin ten d en t of D ocu­
m ents, U .S. G overnm ent P rin tin g Office,
W ashington, D.C. 20402. T h e S ec retary
m ay from tim e to tim e revise the S p e ­
cial In fo rm atio n Booklet. T h e S pecial
In form ation B ooklet m ay be p rin ted or
reproduced in any form , provided th a t
no ch ange is m ade, other th an a s p er­
m itted under p a ra g ra p h (c) of th is se c ­
tion. T h e Sp e cial In fo rm atio n Booklet
m ay n ot be m ad e a p a r t of a la rg e r docu­
m ent fo r purposes of distribu tion under
R E SP A and th is section. Any color, size
an d quality of paper, type of print, an d
m ethod of reproduction m ay be used so
long a s the booklet is clearly legible an d
easily readable.
(c) Permissible changes. No ch an ge to,
deletion from or ad d ition to the F o re ­
word an d tex t of the S p e cial In form ation
Booklet cu rrently p rescribed by the S e c ­
retary sh all be m ad e other th a n those
specified below or an y oth ers approved
in w riting by the S ec reta ry :




(1) Th e cover of the booklet m ay be
in any form an d m ay contain any draw ­
ings, p ictu res, or artw ork, provided th a t
th e words “ settlem en t c o sts” are used in
th e title. N am es, ad d resses an d tele­
phone n um bers of th e len der or others
an d sim ilar in form ation m ay a p p e a r on
the cover, but no discussion of the m a t­
ters covered in the booklet sh all appear.
(2) T h e Sp ecial In fo rm atio n Booklet
m ay be tra n sla te d into other lan gu ages.
(3) Th e w ording m ay be deleted which
precedes the forew ord, auth orizin g the
reprin tin g of the booklet an d referrin g
to sa le by the Su perin ten den t of D ocu­
m ents, but n ot the first p arag ra p h , re ­
ferrin g to p rep aratio n of the booklet by
the S ecretary .
(4) In the la st sentence of the fo re ­
word, “ a lending in stitu tio n ” m ay be
add ed a fte r “ local consum er a ffa irs
agen cy.”
(5) In the “ A dvance disclosu re” se c­
tion, the th ird sentence of the second
p a ra g ra p h m ay be deleted.
(6) In the section, “ 2. S ettlem en t a t ­
torneys, escrow an d closing a g en ts,” the
second p a ra g ra p h an d first senten6e of
the th ird p a ra g ra p h m ay be deleted.
(7) In section B6, in the p a rag ra p h
en titled “ c. Settlem en t A gen t,” the words
“ and location ” m ay be deleted fro m the
la st sentence.
§ 82.6 U n iform
D isc lo su r e /S ettlem e n t
S tatem en t Form .

(a ) Use of Form. H U D F orm 1, “ D is­
clo su re/S ettle m e n t S ta te m e n t,” p ag es 1
a n d 2 of which, with in struction s, are
set fo rth in A ppendix A to th is p art, an d
the th ird p age of which, with in stru c­
tions, is set forth in A ppendix B to th is
p art, sh all be used a s the advan ce d is­
closure statem en t under R E S P A section
6 an d § 82.7 o f th is P a rt, an d a s the
settlem en t statem en t under R E S P A se c ­
tion 4 a n d § 82.8 of th is P a rt.
(b) Printing and duplication of Form.
Th e
U niform
D isclo su re/S ettlem en t
S ta te m e n t F orm m ay be reproduced by
len ders or others. L en d ers are required
to u se the form , with the first two p ag es
a s p rescribed by th e S ec retary an d the
th ird p ag e a s prescribed by th e F ed eral
R eserve B o ard. Only the follow ing p er­
m issible ch an ges an d insertion s m ay be
m ad e:
(1) In B lock A, the lender or other
com pany reproducing the fo rm m ay in ­
se rt its b u siness n am e a n d /o r logotype
an d m ay rearran g e, b u t n ot delete, the
other in form ation which ap p ea rs in
Block A.
(2) In Block F, th e nam e, ad d ress an d
o th er in form ation re gard in g the lender
m ay be printed, an d a sp ace or sp aces
m ay be p rin ted fo r len der’s loan pum ber
or sim ilar inform ation .
( 3 ) T h e form m ay be p rin ted se p a ­
rately to be used only a s an advan ce
disclosure form or to be used only a s a
form fo r settlem en t, in which cases the
p a ra g ra p h en titled “ S T A T E M E N T O F
A CTU A L C O S T S ” an d item s 5 0 0 through
6 0 3 m ay be deleted from the form used
fo r adv an ce disclosure, an d the p a r a ­
grap h entitled “ ADVANCE D IS C L O ­

22451
S U R E O F C O S T S ” m ay be deleted from
the fo rm used fo r settlem en t.
(4) A statem en t m ay be p rin ted a t the
end of the p a ra g ra p h “ ADVANCE D IS ­
C L O SU R E O F C O S T S ” , in any style or
type of prin t, t h a t adv an ce disclosure
of p ro ratio n s of ta x e s an d assessm en ts
is b ased upon the assu m p tion th a t tax es
an d assessm e n ts a re not delinquent. Su ch
statem en t if p rin ted on the form will
then be strick en where advan ce disclo­
su re is not based upon such assum ption.
S ee § 82.7 ( k ) .
(5) No ch an ges in th e size or type
style of p rin t or th e lay out of th e first
two p ag es of the fo rm sh a ll be m ade,
except a s follow s: (A) T h e lay o u t of
the form m ay only be reset in type if
su ch type sty le is ap p ro x im ately the
sam e size an d ap p earan ce, is easily re a d ­
able, an d the en tire fo rm lay out is iden ­
tical to the form a s p rescribed by H U D ;
an d (B ) where n ecessary to accom m o­
d a te com pu ter equipm ent, th e fir st two
p ag es o f the fo rm m ay be p rin ted in a
la rg e r size of p rin t an d differen t type
style an d the d istan ce betw een lin es m ay
be in creased, but not decreased, bu t there
sh all be no other ch an ge in th e layout
an d p lacem en t of in form ation on the
form . As to the th ird page, see R e g u la ­
tion Z, 12 C F R P a r t 226, an d th e F ed eral
R eserve B o ard in stru ction s in A ppen­
dix B .
/
(6) In the first two p ag es, item s listed
in the form n ot u sed locally o r not used
in connection w ith m o rtgages by the
lender m ay be lined out in a m an n er so
th a t th ey m ay still be read.
(7) In the first two p ages, ch arges not
listed which are m ad e locally m ay be in ­
serted in blan k sp ace s in an y sty le or
type of p rin t of sim ila r size, b u t which is
different from the sty le a n d ty p e of p rin t
used in th e b alan ce of the form (to in ­
d icate item s n ot listed n ation w ide).
(8) S ig n a tu re lines an d cu stom ary lo­
cal re citals prio r to sig n a tu re lines m ay
be ad d ed a t the end of the second p age
or a t th e end o f th e th ird page.
(9) A dditional blank sp ace m a y be
added above a n d /o r below each p ag e an d
the form m ay be p rin ted on rolls, which
m ay h ave sp rock et holes e.g. fo r com ­
p uter purposes. T h e p ag es m ay be p rin ted
on se p a ra te sh eets or placed on th e fro n t
an d b ack of a sin gle sh eet, or one above
the other on a single, continuous sheet.
(10) T h e form m ay be p rin ted on ligh t
sh ad es of tin ted p ap er a n d m ay be
prin ted in one or m ore colors of clearly
legible inks.
(11) T h e form m ay be p rin ted in
m ulti-copy tea r-o u t sets. S u ch se ts or any
other m ethod fo r m ak in g copies m ay
delete Block J , lines 100 th ro u gh 303,
from the se lle r’s copy a n d B lock K , lines
400 th rough 603, from the B orrow er’s
copy.
(12) T h e form m ay be tra n sla te d into
an y other la n g u a g e with the app rov al of
the S ecretary , but item s of th e T ru th in
L en d in g S ta te m e n t required by law to be
sta te d in E n glish m u st be so stated .
(13) Any oth er deviation in p ag es 1
an d 2 of the form is only perm issible
upon receipt of w ritten app rov al o f the
S ecretary . Any other deviation in the

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS

22452
p ag e 3 T ru th in L en d in g disclosu re m u st
be in accord an ce w ith requ irem ents of
the B o ard o f G overn ors of th e F ed eral
R eserve Sy stem . S ee R egu latio n Z, 12
C F R 226.102 a n d fo rm in stru ction s in
A ppendix B to th is P a rt. A requ est to the
S e c re ta ry fo r ap p ro v al m u st be su bm itted
in w ritin g to the A ssista n t S ec reta ry
fo r H ou sin g Produ ction an d M ortgage
C redit— F ed era l H ousing C om m issioner,
R oom 6100, 451 7th S tree t, SW ., W ash ­
ington, D.C. 20410, sta tin g th e reason s
why the a p p lic an t believes such d evia­
tion is needed. P rio r to receiving such
app rov al, the p rescribed form m u st be
used.
(c) HUD-prescribed additions of items
to form. H U D reserves the righ t to direct
the order an d the m an n er in which a d d i­
tio n al item s a re added to th e first two
p ag es o f the form or in which an y other
ch an ges a re m ad e in the first two p ages
of the fo rm fo r any locality, ju risd iction
or are a.
(d ) Additional sheet. W here there is
a n u n u su ally la rg e n um ber o f insertion s
fo r w hich blan k sp aces in the first two
p ag es o f th e form a re not sufficient, a n
a d d itio n al sh eet fo r su ch item s m ay be
add ed to th e form an d referenced a t the
a p p ro p ria te place or p laces in th e form .
Su ch ad d itio n al sh eets m ay be prin ted.
T h e reverse sid e o f the form m ay be used
in ste a d o f a n ad d itio n al sheet.
§ 8 2 .7 A dvance disclosu re o f settlem en t
costs by len der.

(a) Lender to provide. As required by
R E S P A section 6, each lender m ak in g a
hom e m o rtgage or assu m ption app roval
of a hom e m o rtgage sh a ll m ake or cau se
to be m ad e adv an ce disclosure o f se ttle ­
m en t co sts on HUD F orm 1 in accordan ce
with th is section.
(b) Timing of advance disclosure. E x ­
cept a s provided in p a ra g ra p h s (c) and
(d) of th is section, th e lender sh a ll place
in th e m ail to or deliver to the borrow er
an d the seller the adv an ce disclosure
sta te m e n t (on H U D F orm 1) a t any
tim e n ot la te r th an 7 calen d ar days
a fte r the d a te of loan com m itm ent. A d­
van ce disclosure m ay be m ad e prio r to
loan com m itm ent. Settlem en t sh a ll not
occur less th an 15 calen d ar d ay s a fte r
su ch m ailin g or 12 ca len d a r d ay s a fte r
such delivery. W here ad v an ce disclosure
state m e n ts to differen t p artie s a re m ailed
or delivered on different d ates, the m in i­
m um period to settlem en t provided above
sh all be the la te st d ate required w ith re ­
sp ect to any one disclosu re statem en t.
S e e p a ra g ra p h (p) o f th is section re g a rd ­
in g T ru th in L en d in g disclosure.
E x a m p l e 1. L o a n C o m m i t m e n t Is m a d e
J u l y 2 . S e t t l e m e n t Is a n t i c i p a t e d t o o c c u r
w ith in 60 d a y s. A d v a n c e d is c lo s u re s ta t e ­
m e n t i s d e l i v e r e d t o o n e s e l l e r o n J u l y 5,
m a ile d t o a s e c o n d s e lle r o n J u ly 7 a n d
m a ile d t o b o rro w e r o n J u ly 9. S e ttle m e n t m a y
n o t b e h e ld p r io r t o J u ly 24 (1 5 d a y s fro m ,
a n d n o t in c lu d in g , J u ly 9 ). A d v an ce d is ­
c lo s u r e is t im e ly b e c a u s e i t is m a d e n o t
l a t e r t h a n J u l y 9 (7 d a y s f ro m , a n d n o t i n ­
c lu d in g , J u ly 2 ) .

(c) Timing where settlem ent is an­
ticipated more than 60 days after loan




commitment. W here as of the d a te of
loan com m itm ent, the d ate of settlem en t
is an ticip ated by the lender, b ased upon
in form ation given to the lender, to occur
m ore th a n 60 ca len d a r d ay s a fte r the
d ate of loan com m itm ent, the lender
m ay in its discretion m ail or deliver the
adv an ce disclosure sta tem en t subsequent
to the tim e prescribed in p a ra g ra p h (b ),
but n ot la te r th a n 60 days prior to the
an ticip a ted d ate o f settlem en t. T h ere­
afte r, if the lender is adv ised t h a t the
d ate of settlem en t is expected to occur
still late r, the lender m ay in its d is­
cretion m ail or deliver the advan ce d is­
closure statem en t a t any tim e n ot la te r
th a n 60 calen d ar day s p rio r to su ch re ­
vised a n ticip ated d ate of settlem en t. If
a t any tim e subsequen t to the d ate of
loan co m m itm en t the lender is advised
th a t the d ate of settlem en t is an ticip ated
earlier th a n previously an ticipated , len d ­
er sh all m ail or deliver the adv an ce d is­
closure sta tem en t on or before 60 days
prior to such revised a n ticip ated d ate of
settlem en t or, if such revised d ate is
within 67 d ay s of the d a te lender is a d ­
vised of the revised an ticip a ted d ate of
settlem en t, len der sh all m ail or deliver
the ad v an ce disclosure sta tem en t not
la te r th a n 7 calen d ar d ay s a fte r being
advised of such revised d ate of se ttle ­
m ent. N oth in g in th is subsection (c)
sh all a lte r or affect the m inim um periods
betw een disclosure an d settlem en t set
fo rth in the th ird sentence of p a rag ra p h
(b) of th is section. S ee p a ra g ra p h (p)
of th is section regard in g T ru th in L en d ­
in g disclosure.
E x a m p le 2. L o a n C o m m itm e n t is m a d e
J u ly 1 a n d s e ttle m e n t is a n tic ip a te d to o c c u r
O c to b e r 15. L e n d e r m a y m a il o r d e liv e r a d ­
v a n c e d is c lo s u re a t a n y tim e o n o r b e fo re
A u g u s t 14 (6 0 d a y s b e fo re , a n d n o t in c lu d in g ,
O c to b e r 1 5 ). A s o f A u g u s t 1, L e n d e r h a s n o t
y e t m a d e a d v a n c e d i s c l o s u r e a n d is a d v is e d
t h a t s e t t l e m e n t is a n t i c i p a t e d N o v e m b e r 15.
L e n d e r m a y m a il o r d e liv e r a d v a n c e d i s ­
c lo s u re s ta te m e n t a n y tim e o n o r b e fo re
S e p t e m b e r 1 4 . O n S e p t e m b e r 1, L e n d e r i s a d ­
v ise d t h a t s e ttle m e n t is a n tic ip a te d t o o c c u r
N o v e m b e r 1. L e n d e r m u s t m a i l o r d e liv e r
a d v a n c e d is c lo s u re s ta te m e n t o n o r b e fo re
S e p te m b e r 8.

W a iv e r 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
Id e n tific a tio n o f T ra n s a c tio n :
B o r r o w e r ( s ) : ________________________________________
S e l l e r ( s ) : ____________________________________________
P r o p e r t y : ____________________________________________
L o a n a m o u n t : _______________________________________
L e n d e r : _______________________________________________
D a t e o f s e t t l e m e n t : ________________________________
I h e r e b y a c k n o w le d g e a n d a ffirm t h a t I
k n o w t h a t th e R e a l E s ta te S e ttle m e n t P ro c e ­
d u re s A c t o f 1974 re q u ir e s t h e L e n d e r to m a il
to m e a n a d v a n c e ite m iz e d d is c lo s u re in w r it­
in g o f e a c h c h a rg e a ris in g in c o n n e c tio n w ith
t h is s e ttle m e n t n o t l a t e r t h a n 15 c a le n d a r
d a y s p r io r to t h e d a te o f s e ttle m e n t, o r d e ­
l i v e r s u c h d i s c l o s u r e t o m e n o t l a t e r t h a n 12
d a y s p r io r to t h e d a te o f s e ttle m e n t. I f u r ­
th e r u n d e r s ta n d t h a t if th e le n d e r fa ils to
p ro v id e t h e r e q u ir e d d is c lo s u re I m a y re c o v e r
fro m i t $500 o r a c tu a l d a m a g e s , w h ic h e v e r
is g r e a t e r , p l u s c o u r t c o s ts a n d a r e a s o n a b l e
a t t o r n e y ’s f e e a s d e t e r m i n e d b y t h e c o u r t .
N o tw ith s ta n d in g t h e a b o v e , I h e r e b y w a iv e
t h e r i g h t t o r e c e i v e s u c h d i s c l o s u r e 12 d a y s
o r h a v e it m a ile d 15 d a y s p r io r to s e ttle m e n t
a n d I f u r t h e r c e rtif y t h a t :
(1 ) A p p lic a tio n f o r t h is lo a n w a s m a d e
n o t m o r e t h a n 21 c a l e n d a r d a y s p r i o r t o s e t ­
t l e m e n t d a te a n d I h a v e c o n s e n te d , t o s e t t l e ­
m e n t o n t h a t d a te ; a n d
(2 ) I re c e iv e d t h e a d v a n c e d is c lo s u re o f
s e tt le m e n t c o s ts a t le a s t 3 d a y s ( e x c lu d in g
S a tu rd a y s , S u n d a y s a n d h o lid a y s ) p r io r to
th e d a te o f s e ttle m e n t.
(3 ) I u n d e r s ta n d t h a t I a m n o t r e q u ir e d
to e x e c u te th is w a iv e r a n d m a y , in s te a d , d e ­
te r m in e n o t to w a iv e a n d to r e q u ir e t h e a d ­
v a n c e d is c lo s u re o f s e ttle m e n t c o s ts to b e
d e liv e re d to m e 12 d a y s b e fo r e s e tt le m e n t o r
m a ile d to m e 15 d a y s b e fo re s e ttle m e n t; a n d
(4 ) I u n d e r s t a n d t h a t if I s ig n t h i s w a iv e r
in a d v a n c e o f th e d a te o f s e ttle m e n t, I m a y
re v o k e t h i s w a iv e r a t a n y t im e p r io r t o t h e
d a te o f s e ttle m e n t.
S ig n a tu r e (s)

D a te

(e) More than one lender. W here two
or m ore home m o rtgages are m ade with
respect to the sam e sale or tra n sfer of
the m ortgaged property, each lender m ay
independently sa tisfy the advan ce d is­
closure requirem ents, or they m ay join tly
sa tisfy the advan ce disclosure require­
m ents. In either case, each lender sh all
be fully responsible to the borrower and
(d)
Waiver of minimum period be­ seller to m ake th e required disclosure.
(f) Good faith estimates. W here the
tween advance disclosure and settlement.
T h e m inim um period betw een advan ce ex a c t am ou n t of a ch arge required to be
disclosure a n d settlem en t provided in sta ted in the advan ce disclosure sta te ­
p a r a g ra p h (b) m ay be reduced to 3 days m ent is not known, th e lender m ay sta te
from a ctu al receipt o f the adv an ce d is­ a good fa ith estim ate m ade by th e lender,
closure sta tem en t by the borrow er an d or an estim ate obtained by the lender
the seller where settlem en t is held not from a provider of settlem en t services
la te r th a n 21 d ay s a fte r the d ate the loan which the lender reason ably believes is
ap p lication w as m ade. S u ch reduction a good fa ith estim ate. E ach estim ate
sh all only be m ad e w here a copy o f the m u st be sta ted a s a specific figure, and
follow ing w aiver form is voluntarily not a s a ran ge of possible figures. The
executed by each borrow er an d seller advan ce disclosure statem en t sh all state
who h a s n ot been m ailed or delivered th e an “ ( e ) ” a fte r each figure which is an
adv an ce disclosure sta tem en t on or b e­ estim ate.
(g) Charges to be disclosed. T h e a d ­
fore th e tim e lim it specified in p a ra g ra p h
(b) o f th is section an d is a tta c h e d to vance disclosure statem en t sh all sta te the
th e settlem en t statem en t. S u ch w aiver am ou n t or estim ated am oun t of - the
ch arges to be im posed upon the borrower
does not w aive an y app licab le rig h t of and th e seller sh all set forth in the U n i­
rescission under th e T ru th in Lendin g form D isclosu re/Settlem en t S tate m e n t
A ct; see R egu latio n Z, 12 C F R P a r t 226, (H UD F orm 1) lines 700 through 1400
fo r requ irem ents app licab le to w aiver of an d all sim ilar ch arges to be p aid by bor­
rower an d seller which are not listed in
rig h t o f rescission.

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS
said lin es 700 through 1400, except as
provided in p a ra g ra p h (h) of th is section
regardin g h az ard insuran ce, p arag ra p h
(i) of th is section regard in g atto rn ey ’s
fees, an d p a ra g ra p h (j) of th is section
regardin g inspection ch arges an d other
ch arges. B locks J an d K sh a ll be com ­
pleted; ad ju stm en ts m ay be m ad e in a c ­
cordance with p a ra g ra p h (k) of th is se c ­
tion. A t the len der’s option, lender m ay
delete Block J fro m the disclosure to the
seller. A t th e len der’s option, len der m ay
om it Block K from the disclosure s ta te ­
m ent to the borrower.
(h) Exception to advance disclosure
of hazard insurance charges. Th e ch arges
for h azard in suran ce binder or policy
covering th e m o rtgaged property are not
required to be sta te d in the advan ce d is­
closure sta tem en t where th e borrower
independently obtain s his own h azard
insuran ce binder or policy, w hether or
n ot th e len der requires such binder or
policy to be obtained fo r settlem en t, p ro ­
vided th a t th e binder or policy h a s not
been obtained by, an d th e carrie r or in ­
su ran ce broker or agen t h a s not been se ­
lected fo r the borrow er by, any of the
follow ing p erson s: T h e len der; a n agen t
or represen tative of the lender or in d e­
pen den t co n tracto r origin atin g the hom e
m ortgage in the n am e of th e len der; the
real esta te agen t or b rok er; or the p e r­
son selected to conduct th e settlem en t.
(i) Exception to advance disclosure of
attorney’s fees. F ees or estim ated fees to
be p aid by borrow er to borrow er’s a tto r ­
ney or by seller to seller’s atto rn ey are
n ot required to be sta te d in th e advan ce
disclosure statem en t where su ch a tto r ­
ney is n ot retain ed to p erform the title
search or other services required by the
lender a n d the borrow er or seller, a s the
case m ay be, independently elects to be
represented by a n atto rn ey an d in d e­
pendently selects the p articu la r attorney.
A ttorney’s fees or estim ate s th ereof are,
however, required to be sta te d in the
follow ing c a se s:
(1) F ees to be p aid by th e borrower
for an atto rn ey represen tin g the lender,
the seller or any oth er p erson ;
(2) F ees to be p aid by th e seller for
a n attorn ey represen tin g the lender, the
borrower or any oth er person;
(3) F ees to be p aid by the borrower
or the seller fo r a n atto rn ey rep resen t­
ing the borrow er or seller, respectively,
if the borrow er or seller is required by
the lender or h is agen t or represen tative
or independent co n tractor origin atin g
the hom e m o rtgage in the n am e of the
lender to be represented by counsel;
(4) F ees to be p aid by the borrow er or
the seller fo r a n atto rn ey represen tin g
the borrower or seller, respectively, if
the lender or h is a g en t or represen tative
or independent co n tractor origin atin g
the hom e m o rtgage in the n am e of the
lender selects the attorney. F o r purposes
of this p a ra g ra p h (i) (4 ), the len der or
such other person is not considered to
select the atto rn ey if he merely recom ­
m ends a list of a t le a st three attorn eys
an d does n ot require the borrower to
select an atto rn ey from such list.




(j) Exception to advance disclosure for
charges for certain other services inde­
pendently procured by borrower or seller.

22453

lished by the th ird sentence of p a r a ­
g rap h (b ).
(2) A len der sh a ll n ot be liable under
C h arges or estim ates thereof fo r services R E S P A fo r a violation which w as not in ­
n ot required by the lender or his agen t ten tion al an d resu lted from a bona fide
or represen tative or independent con­ error n otw ith stan d in g the m ain ten an ce
tra cto r origin atin g the hom e m ortgage of procedures adopted to avoid su ch a n
fo r the lender are n ot required to be error.
(3) In order to show a ctu al dam ages
sta te d in the adv an ce disclosure s t a t e ­
m ent w here the borrow er or seller in d e­ under R E S P A , the borrow er(s) or the
pendently elects to ob tain such services se lle r(s) seek in g d a m a g es above $500
an d independently selects the provider of m u st estab lish on the p a rtic u la r fa c ts of
the case th a t h a d th e required disclosu re
such services.
(k) Disclosure of adjustments for taxes been m ade, th e borrow er (s) or the se ll­
and assessments. Len d er m ay m ake the er (s) would h ave ob tain ed settlem en t
disclosure of a d ju stm en ts fo r ta x es an d services co stin g a t le a st $500 less th a n
a ssessm e n ts based upon the assu m ption those he or sh e a ctu ally paid.
th a t no tax es an d a ssessm e n ts are delin ­
(4) L o ss b ase d upon se lle r’s claim ed
quent, in lieu of determ in ing from the loss of a sale , borrow er’s claim th a t he
ap p ro p riate records w hether delinquen­ w as unable to p u rch ase due to len d er’s
cies exist. W here lender m ak es disclosure fa ilu re to m ak e proper disclosure, b o r­
b ased upon su ch assum ption, lender sh all row er’s claim th a t he would have p u r­
place in Block C a sta tem en t th a t a d ­ ch ased a different property, or d am ag es
van ce disclosure of p ro ratio n s o f ta x e s oth er th a n described in p a r a g ra p h (M )
and assessm e n ts is based upon th e a s ­ (3) o f th is section m ay n ot be the b a sis
sum ption th a t ta x e s an d a ssessm e n ts are for a claim u nder R E S P A fo r actu al
n ot delinquent. See § 82.6(b) (4) re g a rd ­ dam ages in excess of $500.
ing the prin tin g of su ch a statem en t.
(o) No Fee for Preparation of Advance
(1)
Single disclosure. W here subsequent Disclosure Statement. S ee § 82.10.
to m ailin g or delivering the advan ce d is­
(p) Truth in Lending disclosure. T h e
closure statem en t, ch an ges in an ticip ated th ird p ag e of the U n iform D isclo su re/
ch arges com e to the a tte n tio n of the Settlem en t S ta te m e n t, A ppendix B to
lender no ad d ition al or revised advan ce th is p art, se ttin g fo rth the T ru th in
disclosure sta tem en t is required to be L endin g disclosure, sh a ll be com pleted
provided. T h e lender m ay in its d iscre­ an d provided in accordan ce w ith the
tion, b u t is not required to, provide u p ­ T ru th in L endin g Act, R egu lation Z o f
dated or corrected am ou n ts to a p arty the F ed eral R eserve B o ard , 12 C F R P a rt
the lender u n d erstan d s will p ay the 226, an d an y oth er F ed era l R eserve
ch arges in question or all p a rtie s by le t­ B o ard requirem ents. W here R egu latio n
Z estab lish es a tim e lim it fo r the m ak in g
ter or otherwise.
(m ) Record-keeping. Len d er sh all re­ of such T ru th in L en d in g disclosu re
ta in a copy of the advan ce disclosure which is earlier th a n the app licable tim e
statem en t required to be p rep ared p u r­ lim it u nder p a r a g ra p h s (b ), (c) a n d (d)
su a n t to R E S P A section 6 for 2 y ears, e x ­ of th is section fo r the m ak in g of a d ­
cept th a t in th e event lender disposes of vance disclosure, the T ru th in L en d in g
its in terest in the Home M ortgage an d disclosure m u st be m ad e a t the tim e re ­
does not service the hom e m ortgage, quired by R egu latio n Z. In su ch cases,
lender m ay perm it its copy o f the a d ­ the first two p ag e s of the U n iform D is­
van ce disclosure statem en t to be deliv­ clo su re/S ettle m e n t
S ta te m e n t,
HUD
ered to the owner or servicer of the hom e F orm 1, m ay be m ailed or delivered su b ­
m o rtgage a s p a rt of the tra n sfe r of the sequently, b u t w ithin the app licable tim e
loan file. A copy of the adv an ce disclo­ lim its estab lish ed in th is p art, an d the
su re statem en t m ay be required to be th ird p age T ru th in L en d in g disclosure
sub m itted to the S ecretary a n d /o r to is not required to be given a second tim e
other F ed era l agencies. N othing in th is when p ag es 1 an d 2 a re m ailed or
P a rt alters, am ends or in any way re ­ delivered.
duces the se p a ra te record keeping re ­
§ 8 2 .8
U n iform S ettlem en t Statem en t.
quirem ents of R egu lation Z of the F e d ­
(a
)
Use
of HUD Form 1. As required
eral R eserve B o ard. S ee 12 O FR 226.6( i ) .
(n ) Damages. As provided in R E S P A by R E S P A section 4, th e U niform S e t ­
S ta te m e n t,
HUD
section 6 (b ), a lender which fa ils to tlem en t/D isclosu re
provide the prospective borrow er(s) or F orm 1, sh a ll be used a s the settlem en t
seller (s) with the required advan ce d is­ statem en t for every H om e M ortgage s e t ­
closure sh all be liable to su ch borrow ­ tlem ent tra n sa ctio n involving a p urch ase
er (s) or to such se lle r(s), a s the case or tra n sfe r of a m o rtgaged property for
m ay be, in a n am ou n t equal to a ctu al every hom e m o rtgage settlem en t p u r­
d am ages or $500 to all borrow ers an d su a n t to a n assu m p tion approval.
(b) Charges to be stated. T h e U niform
$500 to all sellers, whichever is greater,
an d in the event a court action is filed D isclo su re/S ettle m e n t S tate m e n t, H UD
an d ju d gm en t is obtained a g a in st the Form 1, sh all be com pleted to item ize
lender, court co sts an d a reason ab le a t ­ all ch arges im posed upon the borrow er
torney’s fee a s determ ined by the court, an d the seller in connection w ith the
provided t h a t: (1) A lender sh all not be settlem en t, other th a n c h a rg e s exem pted
liable under R E S P A for m ailin g or de­ from advan ce disclosure u n d er § 82.7
(h ), (i) an d (j) an d which borrow er or
livering the disclosure statem en t la te r
th an the tim e lim its estab lish ed in th is seller co n tra ct to p ay fo r se p arate ly ou t­
section, if w ithin the tim e lim its e sta b ­ side o f the settlem en t. Th e person pre-

FEDERAL REGISTER, V O L 4 0 , NO. TOO— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS

22454
p a rin g the settlem en t sta tem en t is not
requ ired to supply th e in form ation in
B lock J in the copy su p plied to the
seller, n or to supply th e in form ation in
B lock K to th e borrower.
(c) Delivery. T h e settlem en t sta tem en t
sh a ll be delivered o r m ailed to th e bor­
row er a n d th e se lle r on th e d a te of se ttle­
m en t or a s soon th e re a fte r a s practicab le,
a n d in an y ca se n o t la te r th a n 3 d ay s
a fte r th e d a te o f settlem en t.
(d) Recordkeeping. L en d er sh a ll r e ­
ta in a copy o f each settlem en t statem en t
requ ired to be p rep ared p u rsu a n t to
R E S P A section 4 fo r 2 years, ex cep t th a t
in th e event len der disposes of its in ter­
e st in th e hom e m o rtgage a n d does not
service th e hom e m ortgage, len der m ay
p erm it its copy o f th e settlem en t s t a t e ­
m en t to be delivered to th e owner o r se rv ­
icer of th e hom e m o rtg a g e a s p a r t o f th e
tra n sfe r o f th e lo an file. N oth ing in th is
p a r t alte rs, am en d s or in an y w ay re ­
duces th e se p a ra te recordkeeping re ­
qu irem en ts of R e gu latio n Z of th e F e d ­
era l R e se rv e B o ard . S e e 12 C P R 226.6( i ) .
A copy o f th e settlem en t sta tem en t m ay
be required to be su bm itted to th e S ec re­
ta ry a n d /o r other F ed era l agencies.
§ 8 2 .9

A determ in ation by th e S ec reta ry th a t
su ch a n inconsisten cy e x ists sh a ll be
m ade, a fte r co n su ltation w ith a p p ro p ri­

U.S.

departm ent o f housing and urban

C a rla

H . H ills ,

Secretary of Housing and Ufban
Development.

S. TYPE OF LOAN:

DEVELOPMENT
- FMA

2 * .,

.» v *

D ISCLOSURE'SETTLEM ENT STATEM ENT
6

FM HA
c o n s /.

3 .^ 7 1 CONV. UNINS.
In s .

F IL S N UM B ER

7 . L Q A N N U M £ j£ rl

1 1 1hr* T rJ lh 'U i’L t w i i n g Act <i/>/>/££.* t o t h i s tr a n s a c tio n , a T ru ih -in -L e n d in g s * M O flT C * ,NS< c a g e n o .
h-'otfrr.'.'r.* :v
•:*» p o f
form.
C. NO75: 'T h is’tora is J^rmshed to vr.u prior to *ettlem rnt to give you information about your settlement co s ts, and again after
settlem ent to sii o w th v
co sts you have paid. The present copy o f the fo;m is:

“ * ADV.\\TC E DiSCLOb'URf. Or COSTS. Some items are estimated, and are marked <f(e)*'. Some amounts may change if
inr* s c it ie w n t is held
a date other than the date estimated below . T h e preparer o f this form is co t responsible for errors
or c h a s e s m «mounto furnished by others.

.

*.
STAT KMKNT OF A C T U A L COSTS. Amounts paid to and b y the settlement n^ent are shown. Items marked " (
__ •-•■yrr- .»,! I M-itsiuV the closin g: they nre shown here for Informs tfonaLourposes and aro no? «nsTud*v? in
__________ __
O.

P.

BORROWER

r<w=»cW T f L O C A T I O N

LENDER

H . S ETTLEM EN T AGENT

P L A C E O F SETTLEM ENT

J . SUMMARY OF BORROWER'S TRANSACTION

LO AN COMMITMENT

AD VA N CE DISCLOSURE

SE TTLEM EN T

D A T E O F PRORATIONS IF
D IF F E R E N T FROM S E T TL E ­
M ENT

JG1. Controcf sales price
102. Personal property
103. Settlement charges to borrower
( frorr. 1in ~ It0 0 . F rrtion L )

1C4.
10 5.

106./ City/town taxes

to

10A County taxes
103. Assessments
109.
110.

to
to
to
*>
to
«®

in .

112.

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

120.

GROSS AMOUNT DUE FROM SORROWER;

200.

AMOUNTS P A tO BY OR IN B E H A LF O F BORROWER:

420,

SELLER:

503. Settlement charges to seller
(frnm lin t • l40 0 .S t'c lm n ft f
504. Existing ioan(s) taken subject to

A c­

505.
506.
507.
503.
.509.

c r e d it s to b o rro w e r fo r ite m s u n p a id b y s e lle r :

206. City/fown taxes
207. County taxes
203. issessm enls
20?.
210.

to
to
to
to
1<»

•

‘

T O T A L AMOUNTS P A ID 8 Y O R IN B E H A LF O P

"

b o rv o v e h

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

31G. c *, sh a t s e t t l e m e n t r s q u i r e o f r o m o r p a y a b l e
-T O SORROWER:

520.

30!. Gross amount due frca borrower
.fiu r i !in c 120)

iJ2. L ets oiMunts paid by or in behalf of borrower
{*'■‘ *1 lin t' 2101
C A S H :" " , ' REQUIRED FROM; OR
P A Y A B L E T O / BORROWER:

. . . --------------------

Credits to borrower for items unpoid by seller:

fa

-l V

303.

AMOUNT BU E TO SE LLER

500. REDUCTIONS IN AMOUNT OUE TO
601. Poyott ot first morlgoge loan
502. Payoff of second mortgage loon

201. Deposit or eornest money
?02. Principal amount of new loon(s)
203. Existing loan(s) taken subiectto
201.

2U .

R E S P A section 18(a) p rovides:

GROSS

to
to
to
to
to
to

N O T E : T h e fo llo w in g 5 0 0 a n d 6 0 0 s e r i e s s e c t i o n s a r o n o t
r e q u ir e d t o b e c o m p le te d w h e n t h i s form i s u s e d lo r a d v a n c e
d ix c lo s u r e o t s e ttle m e n t c o s t s p rio r t o s e t t l e m e n t .

2 !? .

T h i s A c t d o e s n o t a n n u l , a lt e r , o r a ff e c t, o r
e x e m p t a n y p e rs o n s u b je c t to t h e p ro v is io n s
o f t h i s A c t f ro m c o m p ly in g w ith , t h e la w s
o f a n y S ta te w ith re s p e c t to s e ttle m e n t p ra c ­
tic e s , e x c e p t t o t h e e x te n t t h a t th o s e la w s
a r e in c o n s is te n t w ith a n y p ro v is io n o f t h is
A c t, a n d t h e n o n ly t o t h e e x te n t o f t h e i n ­
c o n s is te n c y , T h e S e c re ta ry is a u th o r iz e d to
d e te r m in e w h e th e r s u c h in c o n s is te n c ie s e x is t.
T h e S e c re ta ry m a y n o t d e te rm in e t h a t a n y
S ta te la w is i n c o n s is te n t w ith a n y p ro v is io n

— .....- ...

Adjustments for items paid by seller in odvcnee:

adjustments for ilcms paid by seller In odvance:

R elation to State laws.




K. SUMMARY OF SELLER'S TRANSACTION
400. GROSS AMOUNT DUE TO SELL ER:
401. Contract sales price
402. Personal property
403.
404.
'

ICO. CROSS AMOUNT DUE FROM BORROWER:

N o fe e.

As provided in R E S P A section 12, no
fee sh a ll be im posed or ch a rg e m ad e
u pon an y other person, a s a p a r t of se t­
tlem en t co sts or otherw ise, by a lender
in connection with or on accou n t o f the
p re p a ra tio n a n d distrib u tion required by
R E S P A of th e sta te m e n t or statem en ts
required by R E S P A section 4 (S ettlem en t
S t a te m e n t ), R E S P A section 6 (A dvance
D isclosure) or by th e T ru th in L endin g
A ct.
§ 8 2 .1 1

Effective date. T h ese regu lation s are
effective a s o f Ju n e 20,1975.

M ailin g.

T h e p rovision s of th is p a r t requ irin g ox
p erm ittin g m ailin g o f ad v an ce disclosu re
sta tem en ts, S p e cia l In fo rm atio n B ook ­
le ts or se ttle m en t sta tem en ts sh a ll be
deem ed to be satisfied by p lacin g th e
docu m en t in th e m ail (w hether or n ot
received by th e ad d ressee) ad d ressed to
th e a d d re ss sta te d in the loan a p p lic a ­
tion or in other in form ation su bm itted
to or obtained by lender a t th e tim e of
lo a n ap p lication , or su b m itted to or ob­
ta in e d by th e person conducting the
settlem en t, excep t th a t a revised ad d ress
sh a ll be u sed w here th e lender or such
oth er p erson h a s been exp ressly inform ed
in w riting of a ch an ge o f add ress.
§ 8 2 .1 0

a te F ed eral agen cies, by publication of a
notice in th e F e d e r a l R e g i s t e r .

o f t h i s A c t if t h e S e c r e ta r y d e te r m in e s t h a t
s u c h la w g iv e s g r e a te r p r o te c tio n t o t h e c o n ­
s u m e r. I n m a k in g th e s e d e te r m in a tio n s th e
S e c re ta ry s h a ll c o n s u lt w ith th e a p p ro p ri­
a te F e d e ra l a g e n c ie s .

600.

to
to
to
"'io

.....

to
to

T O T A L REDUCTIONS IN AMOUNT DUE TO SELLER
CASH TO S E LLER FROM SE TTLEM EN T:

631. Gross amount due to seller
(

/ from lin e 42 0 )

)

602. Less total reductions in amount due to
seller f trom line ii'jn*
60 3.

CASH TO SELLER FROM S E TTLEM EN T

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

(

)

RULES AND REGULATIONS
L . S E T T L E M E N T C HARGES

P A ID FROM

P A ID FROM

BORROWER’ S

SE LLER ’ S

FUNDS

FUNDS

701. Totol commission paid by seller
Division of commission os follows:
702. $

to

703. $

to
' # '

704.
800.
801.
802.
803.
804.
805.
806.
807.
808.
809.
810.
811.
900.
901.
902.
903.
904.
905.

ITEMS PAYABLE in CONNECTION WITH LOAN.

Loan Origination fee
%
Loon Discount
%
Appraisal Fee to
Credit Report to
~
Lender's inspection fee
Mortgage Insuronce application fee to
Assumption/refinancing fee

( /^ )

_
U

^

ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE.

Interest from
to
Mortgage insuronce premium for
Hoxard insurance premium for

0$
mo. to
yrs. to
yrs. to

1000.

RESERVES DEPOSITED WITH LENDER FOR:

1001.
1002
1003.
1004.
1005.
1006.
1007.
1008.

Hoxard insurance
Mortgoge insuronce
City property taxes
County property taxes
Annual assessments

1100.

T IT L E CHARGES:

mo.
mo.
mo.
mo.
mo.
nio.
mo.
mo.

1101.
1102.
1103.
1104.
1105.
1106.
1107.

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

1108.

Title insuronce to

0$

3$
j8$
0$
«$

.

/<J0V
f

/mo.
/mo.
/mo.
/ mo.
/ mo.
/mo.
/ mo.
/ mo.

^
( ^

Lender’s coverage $
Owner’ s coveroge $

^
^

L in e

I z o )

Recording fees:

1202.
1203.

City/county tox/stomos: DeedS
JlQle tgs/slomcj; Deeds

1300.

ADDITIONAL SETTLEMENT CHARGES

Deed $

■Mortgoge $

Releases $

, Mnrtgng,. f
; Mortgage S

Section B.
a n d c o m p le te
p lic a b le .

Pest inspection to
V

-----

TOTAL SETTLEMENT CHARGES 'e n te r e d on lin e s 10 3 a n d 5 0 3 , S e c tio n s 1 a n d K )

N O T E : U nder c e r ta in c ir c u m s ta n c e s th e borrow er a n d s e lle r m ay b e p e r m itte d to w a iv e th e J'J^lay p e r io d w h ic h m u st n o rm a lly
o c c u r b e tw e e n a d v a n c e d i s c l o s i r e a n d s e ttle m e n t. In th e e v e n t su ch a w a iv e r i s m ade, c o p ie s o l th e s ta te m e n ts o l w a iv e r,
e x e c u te d a s p r o v id e d in th e r e g u la tio n s o l th e D e partm en t o l H ousing a n d U rban D e v e lo p m e n t, s h a ll b e a tta c h e d to a n d m ade a
p a r t o l th is lorm w h en th e lorm is u s e d a s a s e ttle m e n t statement.
HUD-1 (5-75)

I n s t r u c t io n s f o r C o m p l e t in g U n if o r m D i s ­
clo sure/ S e t tl e m e n t
Statem ent
(H U D
F o r m 1)
T h e fo llo w in g a re i n s t r u c t i o n s f o r c o m ­
p le tin g t h e f ir s t 2 p a g e s o f t h e U n if o rm 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 , H U D F o r m 1,
r e q u ir e d u n d e r S e c tio n s 4 a n d 6 o f th e R e a l
E s ta te S e ttle m e n t P ro c e d u re s A c t o f 1974
(P u b lic L a w 9 3 -5 3 3 )
a n d t h e R e g u la tio n s
t h e r e t o i s s u e d b y t h e U .S . D e p a r t m e n t o f
H o u s in g
and
U rb an
D e v e lo p m e n t
c a lle d
R e g u la tio n X (2 4 C F R P a r t 8 2 ) . T h is f o r m is
to b e u se d

t o p ro v id e a n

advance

d is c lo s u re

o f c o s ts p r io r t o s e tt le m e n t, a n d a s a u n if o r m
s ta te m e n t

of

a c tu a l

c o s ts




I n s t r u c t io n s

S e c t i o n A. T h e l e n d e r , t i t l e c o m p a n y , o r
o t h e r f ir m p r e p a r in g t h e f o r m m a y i n s e r t its
n a m e a n d / o r l o g o t y p e in . S e c t i o n A .

GOVERNMENT RECORDING AND TRANSFER CHARGES

' “ I.
1302.
1303.
1304.
1305.

Item

I n s tr u c tio n s f o r c o m p le tin g t h e in d iv id u a l
i te m s o n t h e f o r m f o llo w . W h e r e n o i n s t r u c ­
t io n s a re g iv e n , t h e i te m is t h o u g h t t o b e
s e lf -e x p la n a to r y .

1201.

1400.

W h e re t h e r e is a n u n u s u a ll y la r g e n u m ­
b e r o f in s e r tio n s fo r w h ic h b la n k s p a c e s in
th e firs t tw o p a g e s o f t h e fo rm a re n o t s u f ­
f ic ie n t, a n a d d itio n a l s h e e t f o r s u c h Ite m s
m ay be a d d e d to th e fo rm a n d refe ren c e d a t
th e a p p ro p r ia te p la c e o r p la c e s in t h e fo rm .
S u c h a d d itio n a l s h e e ts m a y b e p r in te d . T h e
r e v e r s e s id e o f t h e f o r m m a y b e u s e d in s te a d
o f a n a d d itio n a l s h e e t.

f
)

I n s t r u c t io n s

I n f o r m a t i o n a n d a m o u n t s m a y b e fille d
in b y ty p e w rite r, h a n d p r in tin g , c o m p u te r
p r in tin g , o r a n y o th e r m e th o d p ro d u c in g
c le a r a n d le g ib le r e s u lts . C o p ie s o f t h e f o rm
s e n t to t h e b o rro w e r a n d t h e s e lle r m a y b e
c a r b o n c o p ie s , e l e c t r o s t a t i c c o p ie r c o p ie s , o r
o t h e r c le a r ly le g ib le c o p ie s . R e f e r t o R e g u ­
la tio n X r e g a rd in g ru le s a p p lic a b le to p r i n t ­
in g o f th e fo rm .

—

(includes above item s No.:

1200.

^

G eneral

(includes above item s i\o .:

1109.
1110.
1111.
1112.
1113.

e s t a t e t r a n s a c t i o n s is a p a r t o f t h e U n i f o r m
D i s c lo s u r e / S e t tl e m e n t S t a te m e n t . I t is t h e
th ir d p a g e o f th e U n ifo rm D is c lo s u re /S e ttle ­
m e n t F o r m a n d m u s t b e c o m p le te d i n a ll
c a se s in w h ic h th e • T r u th in L e n d in g A c t
a p p lie s t o t h e t r a n s a c t i o n . F o r s p e c ific i n ­
s tru c tio n s o n
T r u th - in - L e n d in g d is c lo s u re
r e q u ir e m e n ts u n d e r th e R e a l E s ta te S e ttle ­
m e n t P r o c e d u r e s A c t, r e f e r to t h e I n s t r u c ­
tio n s o f th e F e d e ra l R e se rv e B o a rd , w h ic h
a p p e a r i n A p p e n d i x B t o H U D ’s R e g u l a t i o n
X (2 4 C F R P a r t 8 2 ) .
T h e d i s c l o s u r e i n a d v a n c e o f s e t t l e m e n t is
th e r e s p o n s ib ility o f th e le n d e r. T h e A c t r e c ­
o g n iz e s t h a t th e p re c is e a m o u n t o f e v e ry
in d iv id u a l c h a rg e to b e a sse sse d a t s e ttle m e n t
w ill n o t a lw a y s b e k n o w n a t t h e t im e o f a d ­
v a n c e d is c lo s u re . T h e A c t p ro v id e s : “ I n th e
e v e n t th e e x a c t a m o u n t o f a n y s u c h c h a rg e
is n o t a v a ila b le , a g o o d f a i t h e s ti m a t e o f
s u c h c h a r g e m a y b e p r o v id e d .” A s p r o v id e d
in R e g u la tio n X , th e a d v a n c e d isc lo s u re s ta t e ­
m e n t s h a ll s t a t e a n “ ( e ) ” a f t e r e a c h f ig u r e
w h ic h is a n e s ti m a t e . E a c h e s t i m a t e m u s t b e
s t a t e d a s a s p e c if ic f ig u r e , a n d n o t a s a r a n g e
o f p o s s ib le f ig u r e s .

r f *4)

*

22455

and

a d ju s tm e n ts

to b e g iv e n to th e p a r tie s in c o n n e c tio n w ith
th e s e ttle m e n t. T h e I n s tr u c tio n s fo r c o m ­
p le tio n a re p r im a rily fo r th e b e n e fit o f th e
p e rso n s w h o p re p a re th e s ta te m e n ts a n d
n e e d n o t b e tra n s m itte d to th e p a rtie s as a n
i n te g r a l p a r t o f t h e f o rm . T o d e te r m i n e if
th e
U n ifo rm
D is c lo s u re /S e ttle m e n t S ta te ­
m e n t is le g a lly r e q u i r e d t o b e u s e d i n a p a r ­
tic u la r m o rtg a g e lo a n tr a n s a c tio n , re fe r to
R e g u la tio n X o f th e D e p a r tm e n t o f H o u s in g
a n d U r b a n D e v e lo p m e n t (2 4 C F R P a r t 8 2 ) .
T h e r e is n o o b je c tio n to t h e u s e o f th e fo rm
i n t r a n s a c t i o n s i n w h ic h i t s u s e i s n o t le g a lly
re q u ire d .
The
T ru th -in -L e n d ln g
S ta te m e n t
p re ­
p a re d b y th e F e d e ra l R e se rv e B o a rd fo r re a l

C h e c k a p p ro p r ia te lo a n ty p e
t h e r e m a in in g ite m s a s a p ­

Section C. C h e c k t h e a p p r o p r i a t e b o x i n ­
d ic a tin g w h e th e r th e p a r tic u la r c o p y o f th e
f o r m b e in g c o m p l e te d is f o r a d v a n c e d i s ­
c lo s u re p u r p o s e s o r is a s ta t e m e n t o f a c tu a l
c o s ts a n d d is b u r s e m e n ts a t o r a f t e r s e tt le ­
m e n t . A s p r o v i d e d i n R e g u l a t i o n X , in p r e ­
p a rin g th e a d v a n c e d is c lo s u re s ta te m e n t, th e
L e n d e r m a y m a k e th e d isc lo s u re o f a d ju s t­
m e n ts fo r ta x e s a n d a s s e s s m e n ts b a s e d u p o n
th e a s s u m p tio n t h a t n o ta x e s a n d a sse ss­
m e n ts a re d e lin q u e n t, in lie u o f d e te r m in in g
fro m th e a p p ro p ria te re c o rd s w h e th e r d e ­
l in q u e n c ie s e x is t. W h e re L e n d e r m a k e s d is ­
c lo s u r e b a s e d u p o n s u c h a s s u m p tio n , L e n d e r
s h a ll p la c e i n B lo c k C a s t a t e m e n t t h a t
a d v a n c e d is c lo s u re o f p r o r a tio n s o f ta x e s
a n d a s s e s s m e n ts is b a s e d u p o n t h e a s s u m p ­
tio n t h a t ta x e s a n d a s s e s s m e n ts a re n o t d e ­
lin q u e n t. U n d e r R e g u la tio n X , L e n d e r is
p e rm itte d to p r in t s u c h a s ta te m e n t in
B l o c k C ; w h e r e t h e s t a t e m e n t I s p r i n t e d in
t h e f o rm , i t is t o b e s tr i c k e n w h e r e n o t
a p p lic a b le .
Sections D and E. F i l l i n t h e n a m e s a n d
c u r r e n t m a ilin g a d d re s s e s o f th e b o rro w e r
a n d t h e s e lle r. W h e re th e r e is m o re t h a n
o n e b u y e r o r s e lle r, t h e n a m e a n d a d d r e s s o f
o n e is s u ff ic ie n t.

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS

22456
Section F and H. F i l l i n t h e n a m e a n d a d ­
d re s s o f th e le n d e r a n d t h e s e ttle m e n t a g e n t.
If, a t t h e tim e o f a d v a n c e d isc lo s u re , th e s e t­
t l e m e n t a g e n t h a s n o t y e t b e e n s e le c te d , t h e
a d v a n c e d is c lo s u re fo rm s h o u ld h a v e “ n o t
k n o w n ” e n te r e d in S e c tio n H .
Section G. T h e s t r e e t a d d r e s s o f t h e s e ­
c u r it y p r o p e r ty , if a n y s h o u ld b e g iv e n . I f
t h e r e is n o s tr e e t a d d re s s , a b r ie f le g a l d e ­
s c r ip tio n o r o th e r lo c a tio n o f th e p ro p e rty
s h o u ld b e in s e r te d . I n a ll c a s e s g iv e t h e z ip
c o d e o f th e p ro p e rty .
Section I. F i l l i n t h e s e d a t e s t o t h e e x t e n t
t h e y a r e k n o w n . I f a d v a n c e d is c lo s u re is
m a d e b e fo re c o m m itm e n t, a n e s tim a te d c o m ­
m itm e n t d a te s h o u ld b e in s e rte d a n d m a rk e d
“ ( e ) ” . I f t h e s e t t l e m e n t d a t e is n o t f ir m a t
th e tim e o f a d v a n c e d isc lo s u re , a n e s tim a te d
s e ttle m e n t d a te
s h o u ld
be
in s e rte d
and
m a rk e d “ ( e ) ” . I f th e p r o ra tio n s o f ta x e s , in ­
s u r a n c e , e tc ., a r e t o b e m a d e a s o f a d a te
d iffe re n t t h a n th e s e ttle m e n t d a te , in d ic a te
th e d a te o f p r o ra tio n s o n th e la s t lin e in th is
se c tio n .
Section J. Sum m ary of Borrower’s Trans­
action. T h e B o r r o w e r m a y b e g i v e n a c o p y
o f th e fo rm ( in c a se o f b o th 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 ) w h i c h d o e s n ot c o n ­
t a i n t h e in f o r m a t io n fille d in u n d e r “ S u m ­
m a r y o f S e l l e r ’s T r a n s a c t i o n ” ( B l o c k K , S e r ­
ie s 400, 500, a n d 6 0 0 i t e m s ) .
Lines
am o
th e
h e ld
in a

104

and

u n ts o w ed
b a la n c e in
b y th e le n
lo a n a s s u m

105 a r e f o r a d d i t i o n a l
b y t h e b u y e r. F o r e x a m p le ,
t h e s e l l e r ’s r e s e r v e a c c o u n t
d e r, if a s s ig n e d to th e b u y e r
p tio n c a se , w o u ld b e e n te r e d

h e re .

Lines 106 through 112 a r e f o r i t e m s w h i c h
t h e s e lle r h a d p a id i n a d v a n c e , a n d f o r w h ic h
th e
b u y e r m u s t th e re fo re re im b u rs e th e
s e lle r. O n t h e a d v a n c e d is c lo s u re s t a t e m e n t
t h e e x a c t d a t e f o r p r o r a t io n s w ill n o t u s u a lly
b e k n o w n , a n d th e s e a m o u n t s w ill t h e r e f o r e
b e e s tim a te s . E x a m p le s o f ite m s f o r w h ic h
a d ju s tm e n ts a re m a d e m a y in c lu d e ta x e s a n d
a s s e s s m e n ts p a id in a d v a n c e fo r a n e n tir e
y e a r o r o th e r p e rio d , w h e n s e ttle m e n t o c c u rs
p r io r to th e e x p ir a tio n o f th e y e a r o r o th e r
p e rio d f o r w h ic h t h e y w e re p a id . S e e I n s t r u c ­
t io n f o r B lo c k C a b o v e r e g a r d in g a d v a n c e d is ­
c lo s u r e o f ta x e s a n d a s s e s s m e n ts o n t h e a s ­
s u m p tio n t h a t n o ta x e s a n d a s se s s m e n ts a re
d e l i n q u e n t . A d d i t io n a l e x a m p le s i n c l u d e flo o d
a n d h a z a r d in s u r a n c e p re m iu m s if th e b u y e r
is b e in g s u b s t i t u t e d a s a n i n s u r e d u n d e r t h e
s a m e p o lic y ; m o r tg a g e i n s u r a n c e i n lo a n a s ­
s u m p tio n cases; P U D o r c o n d o m in iu m a s so ­
c ia tio n a s s e s s m e n ts p a id in a d v a n c e ; f u e l o r
o th e r s u p p lie s o n h a n d , p u r c h a s e d b y th e
s e lle r, w h ic h t h e b u y e r w ill u s e w h e n b u y e r
ta k e s p o s s e s s io n o f t h e p ro p e rty ; a n d g ro u n d
r e n t p a id in a d v a n c e .
Line 203 i s u s e d f o r c a s e s i n w h i c h t h e
b u y e r is a s s u m in g o r t a k i n g t i t l e s u b je c t t o
a n e x is tin g lo a n o r o t h e r lie n .
Lines 204 and 205

m a y b e u se d in ca se s in
w h ic h t h e s e lle r h a s t a k e n a t r a d e - i n o r o t h e r
p ro p e rty fro m th e b u y e r in p a rt p a y m e n t fo r
t h e p r o p e r t y b e in g s o ld , o r w h e n a t e n a n t i n
th e p r o p e rty h a s n o t y e t p a id h is r e n t fo r a
p e rio d o f tim e p r io r to t h e s e ttle m e n t, a n d
w h ic h t h e b u y e r w ill c o lle c t. T h e y m a y a ls o
b e u s e d in c a s e s in w h ic h a s e lle r ( ty p ic a lly
a b u ild e r ) is m a k in g a n “ a llo w a n c e ” t o th e
b u y e r fo r c a rp e ts o r d ra p e s w h ic h th e b u y e r
is t o p u r c h a s e o n h i s o w n . S u c h a n a llo w ­
a n c e s h o u ld a ls o b e e n te r e d o n lin e s 5 0 5 -5 0 9 .

Lines 206 through 212

a re fo r ite m s w h ic h
h a v e n o t y e t b e e n p a id , a n d w h ic h t h e b u y e r
is e x p e c te d to p a y , b u t w h ic h a re a t t r i b u t ­
a b le i n p a r t to a p e rio d o f tim e p r io r to th e
s e ttle m e n t. I n ju ris d ic tio n s in w h ic h ta x e s
a r e p a id l a t e i n t h e t a x y e a r, m o s t c a s e s w ill
s h o w t h e p r o r a t io n o f ta x e s i n t h e s e lin e s .
S ee I n s t r u c t i o n to B lo c k C a b o v e r e g a r d in g
a d v a n c e d isc lo s u re o f ta x e s a n d a s se s s m e n ts
o n th e a s s u m p tio n t h a t n o ta x e s a n d a s se s s ­
m e n ts a re d e lin q u e n t. O th e r e x a m p le s i n ­




c lu d e u tilitie s u s e d b u t n o t p a id fo r b y th e
s e lle r, r e n t c o lle c te d i n a d v a n c e b y t h e s e lle r
fro m a t e n a n t fo r a p e rio d e x te n d in g b e y o n d
th e s e ttle m e n t d a te , a n d in te r e s t o n lo a n a s ­
s u m p tio n s . A s w ith lin e s 106 to 112, th e s e
a m o u n t s w ill n o r m a lly b e o n ly e s tim a te s o n
th e a d v a n c e d is c lo s u re s ta te m e n t.
Line 303 m a y i n d i c a t e e i t h e r t h e c a s h r e ­
q u ire d fro m th e b o rro w e r a t s e ttle m e n t (th e
u s u a l.c a s e in a p u r c h a s e tr a n s a c tio n ) o r c a s h
p a y a b le t o t h e b o r r o w e r a t s e t t l e m e n t (if , f o r
e x a m p l e , t h e b u y e r ’s e a r n e s t m o n e y d e p o s i t
e x c e e d e d h is c a s h o b lig a tio n s in th e t r a n s ­
a c tio n ) . T h e a p p r o p r ia te b o x
s h o u ld
be
checked.

Section K. Sum m ary of Seller’s Transac­
tion. T h e S e l l e r m a y b e g i v e n a c o p y o f t h e
fo rm ( in c a se o f b o th a d v a n c e d is c lo s u re a n d
s e ttle m e n t) w h ic h d o e s not c o n ta in t h e i n ­
f o r m a ti o n fille d i n u n d e r “ S u m m a r y o f B o r ­
r o w e r ’s T r a n s a c t i o n ” ( B l o c k J , S e r i e s 1 0 0 ,
200, a n d 300 ite m s ) .
I n s t r u c t i o n s f o r t h e u s e o f lin e s 1 0 6 -1 1 2 ,
a b o v e , a p p ly a ls o t o lin e s 4 0 5 t o 4 1 1 .
A s t h e n o t e o n t h e f o r m in d ic a te s , i t is
n o t n e c e s s a ry to c o m p le te lin e s 500 th r o u g h
603 w h e n t h e f o r m is u s e d f o r a d v a n c e d is ­
c lo s u re . T h e r e a s o n is t h a t in f o r m a tio n a b o u t
p a y o ff fig u re s o n e x is tin g lie n s m u s t n o r ­
m a lly c o m e fro m a t it le s e a rc h a n d p a y o ff
l e tte r s f ro m o th e r le n d e rs , a n d is th e r e fo r e
o f te n n o t a v a ila b le a t t h e tim e o f a d v a n c e
d is c lo s u re . T h e r e is, h o w e v e r, n o o b je c tio n t o
th e
c o m p le tio n o f th e se i s e c tio n s a t t h e
tim e o f a d v a n c e d is c lo s u re if th e le n d e r so
d e s ir e s .
L in e 5 0 4 is u s e d if t h e p u r c h a s e r is a s ­
s u m in g o r ta k in g t it le s u b je c t to e x is tin g
lie n s w h ic h a r e t o b e d e d u c te d f r o m s a le s
p r ic e .

Lines 505 through 509 m a y b e u s e d t o l i s t
a d d it i o n a l l ie n s w h ic h m u s t b e p a id o ff
t h r o u g h s e ttle m e n t t o c le a r t it le to th e p r o p ­
e r ty . T h e y m a y a ls o b e u s e d t o in d ic a te
f u n d s to b e h e ld b y t h e s e ttle m e n t a g e n t fo r
t h e p a y m e n t o f r e p a irs t h e s e lle r is o b lig a te d
to m a k e o r p a y m e n t o f w a te r, fu e l, o r o th e r
u t il it y b ills w h ic h c a n n o t b e p r o r a te d b e ­
tw e e n th e p a rtie s a t s e ttle m e n t b e c a u se th e
a m o u n ts u s e d b y th e s e lle r p r io r to s e tt le ­
m e n t a re n o t y e t k n o w n .
I f t h e s e l l e r ’s r e a l e s t a t e b r o k e r h a s r e ­
c e iv e d a n d h e ld a n e a r n e s t m o n e y d e p o s it
w h ic h e x c e e d s th e c o m m iss io n o w e d to h im ,
a n d if h e w ill t e n d e r t h e e x c e ss d e p o s it d i ­
r e c tly to t h e s e lle r r a t h e r t h a n t h r o u g h th e
s e ttle m e n t a g e n t, th e a m o u n t o f e x c ess d e ­
p o s it s h o u ld b e e n te r e d o n o n e o f lin e s 5 0 5 509, th u s re d u c in g th e a m o u n t to b e p a id
t o t h e s e lle r b y t h e s e tt le m e n t a g e n t b y t h a t
a m o u n t.
In s tru c tio n s
fo r th e
use
o f lin e s
510
t h r o u g h 515 a re t h e s a m e a s th o s e fo r lin e s
206 to 212, ab o v e.
Section L. S e ttle m e n t Charges. G e n e r a l :
F o r a ll ite m s e x c e p t th o s e p a id to a n d r e ­
ta in e d b y th e le n d e r, th e n a m e o f th e p e r ­
s o n o r f ir m r e c e iv in g t h e p a y m e n t s h o u ld b e
show n.

Line 700. I f t h e s a l e s c o m m i s s i o n p a i d b y
th e s e lle r is b a s e d o n a p e rc e n ta g e o f t h e p u r ­
c h a s e p r ic e , e n t e r t h e p u r c h a s e p r ic e a n d
th e p e rc e n ta g e h e re .
Line 701. T h e d o l l a r a m o u n t o f t h e to ta l
c o m m is s io n p a id b y t h e s e lle r is e n te r e d h e r e .
A s in g le e n t r y is m a d e , r e g a r d le s s o f w h e th e r
c o m p e n s a tio n w ill b e p a id to o n e a g e n t o r
s p lit a m o n g s e v e ra l a g e n ts .
Lines 702-703 a r e t o b e u s e d t o s t a t e t h e
s p lit o f th e c o m m iss io n w h e re th e p e rs o n
c o n d u c tin g th e s e ttle m e n t d is b u rs e s p o r tio n s
o f th e c o m m is s io n to tw o o r m o re a g e n ts .
O n ly t h e t o t a l c o m m is s io n is to b e s h o w n
i n t h e b o r r o w e r ’s o r s e l l e r ’s c o l u m n s .
Line 704 m a y b e u s e d f o r a d d i t i o n a l
c h a rg e s m a d e b y t h e s a le s a g e n t, o r f o r a
s a le s
c o m m iss io n
c h a rg e d
to
th e
b u y e r,
w h ic h w ill b e d is b u r s e d b y t h e s e t t l e m e n t
a g e n t.

Line SOI. E n t e r t h e f e e c h a r g e d b y t h e
le n d e r f o r p r o c e s s in g o r o r ig in a tin g t h e lo a n .
I f t h i s f e e is c o m p u t e d a s a p e r c e n t a g e o f
th e lo a n a m o u n t, e n te r th e p e rc e n ta g e in
t h e b la n k in d ic a te d .
Line 802. E n t e r t h e l o a n d i s c o u n t c h a r g e d
b y t h e l e n d e r , a n d if i t is c o m p u t e d a s a
p e rc e n ta g e o f th e lo a n a m o u n t, e n te r th e
p e rc e n ta g e in th e b la n k in d ic a te d .
Line 803. E n t e r a p p r a i s a l f e e s , i f t h e r e i s a
c h a rg e s e p a r a te fro m th e o r ig in a tio n fee .
Line 805 i s u s e d o n l y f o r i n s p e c t i o n s b y
th e L e n d e r o r h is p e rs o n n e l. C h a rg e s fo r
o th e r p e s t o r s tr u c tu r a l in s p e c tio n s r e q u ir e d
b y R e g u la tio n X to b e s ta te d s h o u ld b e
e n te r e d in lin e s 1 3 0 2 -1 3 0 5 .
Line 806 s h o u l d b e u s e d f o r a V A a p p r a i s a l
fe e , F H A a p p lic a tio n fee (w h ic h c o v e rs th e
c o st o f a p p ra is a l b y th e a g e n c y a s w e ll),
o r a fe e r e q u ir e d b y a p r iv a te m o rtg a g e in ­
su ra n c e co m p an y .
Line 807 i s p r o v i d e d f o r c o n v e n i e n c e i n u s ­
in g th e fo rm fo r lo a n a s s u m p tio n tr a n s a c ­
t io n s if a fe e is c h a rg e d b y t h e L e n d e r f o r
a g re e in g to a n a s s u m p tio n o r tr a n s f e r s u b je c t
to a n e x is tin g in d e b te d n e s s .
Line 901. I f i n t e r e s t i s c o l l e c t e d a t s e t t l e ­
m e n t fo r a p a r t o f a m o n th o r o th e r p e rio d
b e tw e e n s e ttle m e n t a n d t h e d a te f ro m w h ic h
i n te r e s t w ill b e c o lle c te d w ith t h e f ir s t r e g u ­
la r m o n th ly p a y m e n t, e n te r t h a t a m o u n t
h e re . I f s u c h i n te r e s t is n o t c o lle c te d u n t i l
th e fir s t r e g u la r m o n th ly p a y m e n t, n o e n tr y
s h o u ld b e m a d e o n lin e 901.
Line 1000. T h i s s e c t i o n i s u s e d f o r a m o u n t s
c o lle c te d b y t h e L e n d e r a n d h e ld i n a n a c ­
c o u n t fo r th e f u tu r e p a y m e n t o f th e o b lig a ­
tio n s lis te d a s th e y fa ll d u e . I n m a n y ju r i s ­
d i c t i o n s t h i s is r e f e r r e d to a s a n “ e s c r o w ” ,
“ im p o u n d ” o r “ t r u s t ” a c c o u n t. I n a d d itio n
to t h e ite m s lis te d , so m e L e n d e rs m a y r e q u ir e
r e s e r v e s f o r flo o d in s u r a n c e , c o n d o m i n i u m
o w n e r s a s s o c ia tio n a s s e s s m e n ts , e tc .
Line 1100. I n m a n y j u r i s d i c t i o n s t h e s a m e
p e r s o n ( e .g ., a n a t t o r n e y o r a t i t l e i n s u r a n c e
c o m p a n y ) p e r f o r m s s e v e r a l o f t h e s e rv ic e s
lis te d in t h i s s e c tio n , a n d m a k e s a s in g le
u n d if f e r e n tia te d c h a rg e fo r so d o in g . I n s u c h
c a se s, e n te r th e o v e ra ll fe e o n lin e 1107, (fo r
a tto r n e y s ) o r lin e 1108 (fo r t it le c o m p a n ie s ) ,
a n d e n te r o n t h e lin e p ro v id e d t h e i te m n u m ­
b e rs o f th e s e rv ic e s lis te d w h ic h a re c o v e re d
in th e o v e ra ll fee . I n s u c h c a se s n o a m o u n ts
s h o u ld b e e n te r e d fo r th e in d iv id u a l ite m s
w h ic h a re c o v e re d b y o v e ra ll fees.
Line 1101. E n t e r h e r e t h e f e e o f t h e p e r s o n
o r fir m c o n d u c tin g th e s e ttle m e n t. I n s o m e
j u r i s d ic t io n s t h i s is te r m e d a c lo s in g o r
e s c ro w fee . I f tw o o r m o re p e r s o n s o r f ir m s
m a k e c h a rg e s in c o n n e c tio n w ith th e sa m e
tra n s a c tio n , e n te r to ta l c h a rg e s in th e a p ­
p r o p r ia te c o lu m n s , a n d in d ic a te t h e b r e a k ­
d o w n o f c h a rg e s o n th e lin e a f te r th e w o rd
“to ”.
Lines 1102 and 1103. I n s o m e J u r i s d i c t i o n s
th e sa m e p e rso n
( e .g ., a n a t t o r n e y ) b o t h
s e a r c h e s t h e t i t l e ( t h a t is, p e r f o r m s t h e n e c ­
e s sa ry re s e a rc h in th e re c o rd s ) a n d e x a m in e s
t i t l e ( t h a t is , m a k e s a d e t e r m i n a t i o n a s t o
w h a t m a t t e r s a ffe c t title , a n d p ro v id e s a t it le
r e p o r t o r o p in io n .) I f s u c h a p e rs o n c h a rg e s
o n ly o n e f e e f o r b o t h s e rv ic e s , i t s h o u ld b e
e n te r e d o n lin e 1103. I f s e p a r a te p e rs o n s
p e rfo rm th e s e ta s k s , o r if s e p a r a te c h a rg e s
a re m a d e fo r s e a rc h in g a n d e x a m in a tio n , th e y
s h o u ld b e lis te d s e p a ra te ly .
Line 1105. E n t e r c h a r g e s f o r p r e p a r a t i o n o f
d e e d s, m o rtg a g e s , n o te s , e tc . I f m o re t h a n
o n e p e r s o n r e c e iv e s a fe e f o r s u c h w o rk in
th e sa m e tra n s a c tio n , s h o w t h e to ta l p a id
in th e a p p ro p r ia te c o lu m n a n d t h e I n d iv id u a l
c h a r g e s o n t h e lin e f o llo w in g t h e w o r d “ t o ” .
Lines 1108-1110. E n t e r t h e t o t a l c h a r g e f o r
title in s u ra n c e (ex c e p t th e c o st o f th e title
b in d e r ) o n lin e 1108. E n te r o n lin e s 1109 a n d
1 1 1 0 t h e i n d i v i d u a l c h a r g e s f o r t h e L e n d e r ’s
a n d o w n e r ’s p o l i c i e s . N o t e t h a t t h e s e c h a r g e s
a r e n o t c a r r i e d o v e r i n t o t h e b o r r o w e r ’s a n d

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

RULES AND REGULATIONS
s e l l e r ’s c o l u m n s , s i n c e t o d o s o w o u l d r e s u l t
in a d u p lic a tio n o f th e a m o u n t in lin e 1108.
Lines 1111-1113. T h e s e l i n e s a r e f o r e n t r y
o f o t h e r t i t l e c h a rg e s n o t a lr e a d y ite m iz e d .
E x a m p le s in s o m e j u r i s d ic t io n s w o u ld in c lu d e
a fe e to a p r iv a te ta x s e rv ic e , a fe e t o a c o u n ty
t i x c o lle c to r f o r a t a x c e r tif ic a te , a n d a fe e to
a p u b lic t it le r e g is tr a r fo r a c e rtif ic a te o f
t i t l e u n d e r a T o r r e n s A c t . S h o w t h e l e n d e r ’s
a t t o r n e y ’s f e e , i f a n y , o n l i n e 1 1 0 7 a n d o t h e r
a tto r n e y s ’ fee s, if r e q u ir e d to b e s ta te d u n d e r
R e g u la tio n X , o n lin e s 1 1 1 1 -1 1 1 3 .
Lines 1303-1305. E n t e r o n t h e s e : l i n e s a n y
o th e r s e ttle m e n t c h a rg e s n o t re fe rra b le to
t h e c a te g o r ie s lis te d a b o v e o n t h e f o r m w h ic h
a re r e q u ir e d b y R e g u la tio n X t o b e s ta te d .
E x a m p le s m a y in c lu d e s t r u c t u r a l in s p e c tio n s

o r p re -s a le in s p e c tio n o f h e a tin g , p lu m b in g ,
o r e le c tric a l e q u ip m e n t. T h e s e in s p e c tio n
c h a rg e s m a y in c lu d e a fee fo r in s u r a n c e o r
w a r r a n ty c o v e ra g e .
Line 1400. E n t e r t h e t o t a l s e t t l e m e n t
c h a rg e s p a id
fro m
b o r r o w e r ’s f u n d s a n d
s e l l e r ’s f u n d s . T h e s e t o t a l s a r e a l s o e n t e r e d
o n lin e s 103 a n d 5 0 3 , r e s p e c tiv e ly , i n S e c ­
tio n s J a n d K .

At ta c h m e n t

of

W aiver F

EXHIBIT

8

Federal. Truth-in-Lending Statement
(As part of Disclosure/Settlement Statement)
I.

A.

Cash price (contract sales price)
1.
2.
3.

Less any cash dovnpayment
Less any trade-in'
Total downpayment

$_
$_

B.

Equals unpaid balance of cash price

C.

Plus any other amounts financed:
1.
2.
3.

Property insurance premiums $
S'
Total other amounts financed

Equals unpaid balance
Less any prepaid finance charges:
1.
2.
3.
4.
5.
6.
F.

Origination fee or points
paid by borrower
$
Loan discount or points
paid by seller
$
Interest from (spccifv date)
to (specify date)
$
Mortgage guaranty insurance $
S'
Total prepaid finance charge

Equals amount financed

II. The FINANCE CHARGE consists of
A.

Interest (simple annual rate
of ______ 7.)

C.
Total FINANCE CHARGE

D.

The ANNUAL PERCENTAGE RATE on the amount financed is
If the contract includes a provision for variation in the
interest rate, describe
______________________ .

IV. The repayment terms are:
The finance charge begins to accrue on

(specify date)

VI. In the event of late payments, charges may be assessed as follows:
VII. (L'se either A or B as appropriate)
A.

Conditions and penalties for prepaying this obligation are __

B.

Identification of method of rebate of unearned finance charge
i s __________________________________________________________________ _

V I I I . I n s u r a n c e t a k e n in c o n n e c t i o n w it h 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 or t h i s o b l i g a t i o n i s __

*

IN ST R U C TIO N S FOR FEDERAL TR UTH I N LENDING
STATEM ENT 1
T h i s f o r m is t h e F e d e r a l T r u t h i n L e n d ­
in g
d is c lo s u re p o r tio n o f t h e D is c lo s u r e /
S e ttle m e n t S ta te m e n t to b e p ro v id e d b y th e
D e p a r tm e n t o f H o u s in g a n d U r b a n D e v e lo p ­
m e n t in c o n n e c tio n w ith th e R e a l E s ta te
S e ttle m e n t P ro c e d u re s A c t (P u b . L. 9 3 -5 3 3 ).
T h i s f o r m is i n t e n d e d t o p r o v id e a fle x ib le ,
m in im u m d is c lo s u re s ta n d a r d in s a tis fa c tio n
o f th e T r u th in L e n d in g ( R e g u la tio n Z ) r e ­
q u ire m e n ts o f th e R e a l E s ta te S e ttle m e n t
P r o c e d u r e s A c t. T h is f o r m
is d e s ig n e d to
a c c o m m o d a te th o s e T r u th in L e n d in g d is ­
c lo s u r e s w h ic h a r e m o s t c o m m o n to r e a l
e s ta te p u r c h a s e tr a n s a c tio n s . H o w e v e r, t h e
fo rm
is n o t c o m p re h e n s iv e
o f a ll c re d it
c h a rg e s o r te r m s t h a t m a y b e in c id e n t to
a n y p a r tic u la r fe d e r a lly r e la te d m o rtg a g e
lo a n . W h e n a g iv e n t r a n s a c t i o n i n c l u d e s le s s
c o m m o n te rm s , s u c h a s b a llo o n p a y m e n ts ,
f o r w h ic h n o s p e c ific p r o v is io n is m a d e o n
t h e f o rm , th e s e t e r m s w ill a ls o n e e d to b e
d isc lo s e d a n d id e n tifie d o n t h e fo rm .
T o m a in ta in t h e f o rm a s a s ta n d a r d iz e d
d is c lo s u re m e c h a n is m w h ile s till p r o v id in g
c r e d ito r s w ith fle x ib ility , c e r t a i n c h a n g e s to
th e fo rm m a y b e n e c e s s a ry . A s lo n g a s th e
a p p lic a b le T r u th in L e n d in g d is c lo s u re r e ­
q u ire m e n ts a re m e t:
(a ) D is c lo s u r e s
p ro v id e d
on
th e
fo rm
w h ic h a re n o t a p p lic a b le to a g iv e n t r a n s ­
a c tio n m a y b e d e le te d . F o r e x a m p le , t h e fi­
n a n c e c h a rg e d is c lo s u re s ( I te m I I) n e e d n o t
b e m ad e in th e case o f a p u rc h a se m o n ey
f ir s t m o r tg a g e o n a d w e llin g .
( b ) D is c lo s u r e s a n d la n g u a g e m o re p e r ­
t i n e n t to a s p e c if ic c h a r g e o r t e r m m a y b e
s u b s titu te d
fo r th o s e p r e s e n tly in c lu d e d .
F o r e x a m p l e , i n I t e m V I I .A ., i f n o c h a r g e
w ill b e a s s e s s e d in t h e e v e n t o f p r e p a y m e n t
o f a lo a n o n w h ic h i n t e r e s t is c o m p u te d o n
th e u n p a id p r in c ip a l b a la n c e , a s ta t e m e n t to
t h a t e ffe c t m a y b e s u b s titu te d .
(c ) A d d itio n a l s p a c e a n d /o r d is c lo s u re s
m a y b e p ro v id e d w h e re n e c e s s a ry to s a tis fy
th e r e q u ir e m e n ts o f R e g u la tio n Z. F o r e x ­
a m p le , a d d itio n a l s p a c e m a y b e p ro v id e d fo r
d is c lo s u r e s i n I t e m IV ; o t h e r c h a r g e s , s u c h
as c o n tin u in g p re m iu m s fo r m o rtg a g e g u a r ­
a n ty in su ra n c e , m a y b e a d d e d u n d e r Ite m

n.

$_____

Total prepaid finance charge
(I. E. 6.)

III. A.

orm

T h e w a iv e r o r w a iv e rs r e d u c in g th e p e rio d
b e tw e e n d isc lo s u re a n d s e ttle m e n t ( if a n y
a r e e x e c u t e d b y th e - p a r t i e s ) a r e a p a r t o f
t h e f o r m w h e n i t is u s e d a s a s e tt le m e n t
s ta te m e n t, a n d s h o u ld b e a tta c h e d to th e
fo rm .

22457

I n d i c a t e s a d i t e , r a t e or 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 an ge .

T h i s f o r m is d e s ig n e d a s a d i s c l o s u r e f o r
b o th lo a n a n d c r e d i t s a le t r a n s a c t i o n s a n d
s h o u ld b e u s e d r e g a rd le s s o f w h e th e r a g iv e n
tr a n s a c tio n m a y b e c h a ra c te r iz e d a s a lo a n
or
c re d it s a le
(§ § 2 2 6 . 6 ( d ) , 2 2 6 .8 (c )
and
2 2 6 .8 (d ) ). T h e f o rm c o n ta in s c e r ta in d is ­
c lo s u r e p r o v is io n s w h ic h a r e r e q u i r e d
in
c r e d i t s a le s d is c lo s u r e s u n d e r T r u t h i n L e n d ­
in g b u t n o t r e q u ir e d in lo a n d isc lo s u re s .
L e n d e rs w h o c h o o se to m a k e o n ly th o s e d is ­
c lo s u r e s r e q u ir e d in c o n n e c tio n w ith lo a n s
u n d e r R e g u la tio n Z m a y d e le te t h e a d d itio n a l
d i s c l o s u r e s r e l a t e d t o t h e c r e d i t s a le s . A ls o
a c e rta in a m o u n t o f d e v ia tio n m a y b e n e c e s ­
s a ry in m o re c o m p lic a te d tra n s a c tio n s , s u c h
a s in th e c a se o f p e r m a n e n t f in a n c in g fo l­
lo w in g th e m a t u r it y o f a h o m e c o n s tr u c tio n
lo a n .
T h is f o r m is i n t e n d e d to b e u s e d s o le ly
fo r th e d isc lo s u re s r e q u ir e d u n d e r th e F e d ­
e r a l T r u t h i n L e n d i n g A c t. E x c e p t w i t h r e ­
s p e c t to re s c in d a b le tra n s a c tio n s , a s n o te d
b e lo w , a ll T r u t h i n L e n d i n g d is c lo s u r e s m a d e
in c o m p lia n c e w ith th e R e a l E s ta te S e ttle ­
m e n t P ro c e d u re s A c t s h a ll b e m a d e o n o n e

JNote: T h e se in s tr u c tio n s a re in te n d e d
to a s s is t i n th e c o m p le tio n o f th e T r u th in
L e n d in g S ta te m e n t, a n d e x c e p t to t h e e x te n t
t o w h ic h R e g u la tio n Z is in te r p r e t e d t o
a c c o m m o d a te th e
R e a l E s ta te S e ttle m e n t
P r o c e d u r e s A c t, t h e i n s t r u c t i o n s a r e i n n o
w a y in te n d e d to s u p e rs e d e o r s u p p le m e n t
t h e p r o v is i o n s o f R e g u l a t i o n Z . A ll s e c t i o n a l
re fe re n c e s in th e in s tru c tio n s a re to R e g u ­
l a t i o n Z (1 2 C F R 2 2 6 ) .

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

—1



RULES AND REGULATIONS

22458
s id e o f a s in g le s h e e t re g a rd le s s o f a n y d if ­
fe rin g R e g u la tio n Z r e q u ire m e n ts . F o r e x ­
a m p l e , i n s p i t e o f t h e p r o v i s i o n s o f § 2 2 6 .8
(a ) ( 1 ), fo r t h e p u rp o s e s o f s a tis fy in g th e r e ­
q u ire m e n ts o f th e R e a l E s ta te S e ttle m e n t
P r o c e d u r e s A c t, p r o m is s o r y n o t e s o r o t h e r
c o n tr a c tu a l o b lig a tio n s s h a ll n o t b e in c lu d e d
o n th e T r u th in L e n d in g d is c lo s u re fo rm .
S im ila r ly , in s p i t e o f § 2 2 6 .6 (c ) ( 2 ) , t h e T r u t h
in L e n d in g fo rm to b e u s e d in c o n n e c tio n
w ith th e R e a l E s ta te S e ttle m e n t P ro c e d u re s
A ct m a y n o t in c lu d e in c o n s is te n t S ta te d is ­
c lo s u re r e q u ir e m e n ts .
C h a r g e s u n d e r § 2 2 6 .4 (b ) n e e d n o t b e i t e m ­
iz e d o n t h i s f o rm , p r o v id e d t h e y a re I te m iz e d
a n d d isc lo s e d o n t h e s e ttle m e n t c o s t p o r tio n
o f th e c o m b in e d fo rm .
I n th e e v e n t t h a t a g iv e n tr a n s a c tio n s u b ­
je c t to th e R e a l E s ta te S e ttle m e n t P ro c e ­
d u r e s A c t is r e s c i n d a b l e u n d e r p r o v is io n s o f
§ 2 2 6 .9 o f R e g u l a t i o n Z , t w o c o p i e s o f a
n o t i c e o f t h e r i g h t o f r e s c i s s i o n (§ 2 2 6 . 9 ( b ) )
s h a ll b e g iv e n s e p a r a te ly f ro m t h e p r e s c r ib e d
fo rm to e a c h b o rro w e r w h o h a s th e r ig h t to
re s c in d .
B o n a f id e e s t i m a t e s m a y b e m a d e i n c o n ­
n e c tio n w ith d a te s o r c h a rg e s fo r w h ic h e x a c t
d o lla r a m o u n ts o r r a te s a re u n k n o w n a t th e
tim e
of
advance
d isc lo s u re
(§ 2 2 6 . 6 ( f ) ) .
W h e n e s tim a te s a re u s e d , th e y s h o u ld b e
s u ita b ly d e s ig n a te d a s s u c h , fo r e x a m p le , b y
a s te r is k s p la c e d n e x t to th e e s tim a te d in f o r ­
m a tio n .
T h e R e a l E s ta te S e ttle m e n t P ro c e d u re s A ct
r e q u ir e s t h a t T r u t h in L e n d in g d is c lo s u re s b e
m a d e a t le a s t 12 d a y s b e fo re s e ttle m e n t a n d
a g a in o n t h e d a y o f s e tt le m e n t. W h ile tw o
s e p a r a te d isc lo s u re s a re re q u ire d , in th o s e in ­
s ta n c e s w h e re n o m a te ria l c h a n g e o c c u rs in
th e in f o r m a tio n r e q u ir e d t o b e d isc lo s e d , a
c o p y o f t h e i n i t i a l d i s c l o s u r e f o r m m a y foe
u s e d i n s a tis f a c tio n o f th e d is c lo s u re r e q u ir e ­
m e n t o n th e d a y o f s e ttle m e n t.
C r e d ito r s in u s in g t h e p r e s c r ib e d fo rm m a y
d e le te t h e n u m b e r i n g s y s te m p r o v id e d ; t h e
n u m b e r s u s e d o n t h e f o r m a r e in c l u d e d s o le ly
t o a id i n r e l a ti n g p e r t i n e n t in s t r u c t i o n s .
H o w e v e r,
in
d e le tin g
th e
n u m b ers
or
in
m a k in g
any
o th e r
a d ju s tm e n ts
to
th e fo rm , c re d ito rs s h o u ld b e g u id e d b y th e
r e q u i r e m e n t s o f § 2 2 6 .6 (a ) t o t h e e ff e c t t h a t
T r u t h i n L e n d in g d is c lo s u r e s b e m a d e c le a r ly ,
c o n s p ic u o u s ly , a n d i n m e a n in g fu l s e q u e n c e .
C r e d ito r s m a y a ls o a d d s ig n a t u r e s , d a te s , a n d
a c k n o w le d g e m e n ts to th e fo rm .

Ite m I
Ite m
I .A . i s p r o v i d e d t o s h o w t h e c a s h
p ric e
( c o n tr a c t s a le s p r ic e )
w h ic h , s h o u ld
e q u a t e t o t h e a m o u n t s h o w n - o n l i n e 101 o f
th e s e ttle m e n t c o s t d is c lo s u re p o r tio n o f th e
c o m b i n e d f o r m (§ 2 2 6 . 8 ( c ) ( 1 ) ) .




I t e m s I . A . I . a n d I . A .2 . a r e p r o v i d e d t o s h o w
a n y c a sh d o w n p a y m e n t o r tr a d e - in . Ite m
I .A .3 . i s p r o v i d e d t o s h o w t h e t o t a l a m o u n t o f
a n y d o w n p a y m e n t s (§ 2 2 6 .8 ( c ) ( 2 ) ) .
I t e m I .B . is p r o v id e d t o s h o w t h e u n p a i d
b a la n c e o f th e c a s h p r ic e w h ic h s h o u ld e q u a l
I .A . m i n u s I .A .3 . ( § 2 2 6 . 8 ( c ) ( 3 ) ) .
I t e m I .C . is p r o v i d e d t o s h o w o t h e r i t e m s
w h ic h a re f in a n c e d a s p a r t o f th e c re d it t r a n s ­
a c tio n . F o r e x a m p le , p r o p e r ty d a m a g e in s u r ­
a n c e p r e m i u m s u n d e r I .C .l. a r e I n c lu d e d in
t h e a m o u n t fin a n c e d , if th e y a re f in a n c e d a s
p a rt o f th e c re d it tra n s a c tio n a n d th e o th e r
c o n d it i o n s o f § 2 2 6 .4 (a ) (6 )
a r e m e t. T h e
b l a n k l i n e I .C .2 . is i n t e n d e d t o i n c l u d e s i m i ­
l a r ite m s , w h ic h a re fin a n c e d , s u c h a s th o s e
l i s t e d i n § 2 2 6 .4 ( b ) o r ( e ) . I t e m I .C .3 . i s p r o ­
v id e d t o s h o w a t o t a l o f o t h e r a m o u n t s fi­
n a n c e d ( § 226 . 8 ( c ) ( 4 ) ) .
I t e m I .D . is p r o v i d e d t o s h o w t h e u n p a i d
b a la n c e
(th e s u m
o f Ite m
I .B . a n d I .C .)
(§ 2 2 6 . 8 ( c ) ( 5 ) ) .
I t e m I .E . is i n t e n d e d t o s h o w p r e p a i d f i ­
n a n c e c h a rg e s a n d t h e to ta l p r e p a id fin a n c e
c h a rg e s
( § § 226.4 ( a ) / 2 2 6 . 8 ( d ) ( 2 ) / 2 2 6 . 8 ( e )

(D).
I t e m I . E . l . is p r o v id e d t o s h o w t h e o r i g i n a ­
tio n fe e o r p o in ts p a id d ire c tly b y th e b o r ­
ro w e r, s u c h a s t h e o n e p o in t p e r m itte d in
V A tra n s a c tio n s .
I t e m I .E .2 . is p r o v i d e d t o s h o w t h o s e l o a n
d is c o u n ts o r p o in ts p a id b y th e s e lle r w h e n
t h e y a r e p a r t o f t h e f i n a n c e c h a r g e (§ 2 2 6 . 4 0 6 ).
I t e m I .E .3 . is p r o v i d e d t o s h o w t h e p r e ­
p a y m e n t o f a n y a c c ru in g in te r e s t c h a rg e
o n t h e c o n tr a c t u n t i l t h e f ir s t p a y m e n t is
d u e . T h e b la n k s p a c e s a re p ro v id e d to sh o w
th e d a te s fo r w h ic h s u c h in te r e s t a c c ru e s .
(T h e d a te s a n d a m o u n ts d isc lo s e d m a y f r e ­
q u e n tly n e e d t o b e e s tim a te d .)
I t e m I .E .4. is p r o v id e d t o s h o w t h e p a y ­
m e n t o f m o rtg a g e g u a ra n ty in s u r a n c e p r e ­
m iu m s , s u c h a s fo r F H A o r p r iv a te m o rtg a g e
g u a r a n ty in s u r e rs , a c c r u in g p r io r to th e
fir s t r e g u la r p a y m e n t.

I t e m III
I t e m I I I A . is p r o v id e d t o s h o w t h e a n n u a l
p e rc e n ta g e r a te a s d e te rm in e d in a c c o rd a n c e
w i t h § 2 2 6 . 5 ( b ) . I t e m I I I .B . is p r o v id e d t o
s h o w a n y v a ria b le in te r e s t r a t e p ro v is io n s
( § 2 2 6 .8 1 0 ) .

Ite m IV
T h is ite m
m e n t te rm s

is p r o v id e d t o s h o w
(§ 2 2 6 .8 ( b ) ( 3 ) ) .

th e

rep a y ­

Ite m V
T h is ite m is p ro v id e d to s h o w t h e d a te o n
w h ic h t h e f in a n c e c h a rg e b e g in s to a c c ru e
o n ly if t h a t d a te d iffe rs fro m th e d a te o f th e
t r a n s a c t i o n (§ 2 2 6 .8 ( b ) ( 1 ) ) .

Ite m

VI

T h is ite m is p ro v id e d f o r t h e d is c lo s u re o f
a n y a m o u n t o r m e th o d o f c o m p u tin g th e
a m o u n t o f a n y d e f a u lt, d e lin q u e n c y , o r s im i­
la r c h a rg e s p a y a b le in th e e v e n t o f la te p a y ­
m e n t s (§ § 2 2 6 . 4 ( c ) / 2 2 6 . 8 ( b ) ( 4 ) ) .

Ite m V II
T h i s i te m is p r o v id e d f o r t h e d i s c lo s u r e o f
th e c o n seq u en c es o f p re p a y m e n t o f th e m o rt­
g a g e o b lig a tio n ; e i t h e r (A ) o r (B ) s h o u ld b e
u s e d , a s a p p lic a b le .
I t e m V IL A , is p r o v id e d f o r t h e d is c lo s u r e o f
c o n d itio n s o r p e n a ltie s c h a rg e d i n t h e e v e n t
o f p r e p a y m e n t o f a lo a n o n w h ic h i n t e r e s t is
c o m p u te d o n th e u n p a id p rin c ip a l b a la n c e
(§ 2 2 6 .8 ( b ) ( 6 ) ) . S h o u l d t h e r e b e n o p e n a l t y
fo r p r e p a y m e n t, a s ta te m e n t t o t h a t e ffe c t
m a y b e s u b s titu te d .
Ite m
V I I .B . i s p r o v i d e d t o i d e n t i f y t h e
m e th o d
of
re b a te
of
u n e a rn e d
f in a n c e
c h a rg e s in th e e v e n t o f p r e p a y m e n t in fu ll
o f in s ta lm e n t o b lig a tio n s w h ic h in c lu d e p r e ­
c o m p u t e d f in a n c e c h a r g e s . I f n o r e b a t e w ill
b e m a d e , a s ta te m e n t to t h a t e ffe c t m u s t b e
i n c l u d e d (§ 2 2 6 .8 ( b ) ( 7 ) ) .

Ite m

V III

T h is ite m is p ro v id e d fo r t h e d is c lo s u re o f
in su ra n c e w ritte n In c o n n e c tio n w ith th e o b ­

I t e m I .F . is p r o v id e d t o s h o w t h e a m o u n t
f i n a n c e d : t h e d i f f e r e n c e b e t w e e n i t e m I .D .
a n d I .E . (§ § 2 2 6 .8 ( c ) ( 7 ) / 2 2 6 .8 ( d ) ( 1 ) ) .

lig a tio n , s u c h a s p r o p e r ty d a m a g e in s u r a n c e

I t e m 11

in s u r a n c e ( to b e d isc lo s e d i n a c c o rd a n c e w ith

T h is ite m is p ro v id e d to s h o w t h e c o m ­
p o n e n ts o f t h e fin a n c e c h a rg e , s u c h a s p r e ­
p a id f in a n c e c h a rg e s , a n d c o n tin u in g p r e m i­
u m s fo r m o rtg a g e g u a ra n ty in s u ra n c e , a s
w e ll a s t o s h o w t h e t o ta l a m o u n t o f th e
fin a n c e
c h a rg e
(§ § 2 2 6 .4 ( a ) /2 2 6 .8 ( d ) ( 3 ) ) .
I t e m I I.A . p r o v id e s t h e o p t i o n a l d i s c l o s u r e o f
th e c o n tr a c t r a te o f in te r e s t a s a n a d d itio n a l
ite m w h e re s u c h in te r e s t is c o m p u te d b y th e
a p p lic a tio n o f a s im p le a n n u a l r a te .

(to

be

d isc lo s e d

(a ) ( 6 ) ) ,

c re d it

§ 2 2 6 .4 (a ) ( 5 ) ) ,

in

a c co rd a n c e

lif e ,

a c c id e n t,

and

in s u ra n c e
( t o fo e
w i t h § 2 2 6 .4 0 4 ).

w ith
or

v e n d o r ’s s i n g l e
d is c lo s e d

in

§ 2 2 6 .4

d is a b ility
in te re s t

acco rd an ce

Ite m IX
T h is ite m

is p r o v id e d t o s h o w a n y s e c u r ity

in te r e s ts ta k e n in c o n n e c tio n w ith th e tr a n s ­
a c t i o n (§ 2 2 6 . 2 ( z ) a n d § 2 2 6 . 8 ( b ) ( 5 ) ) .
[ P R D o c .7 5 -1 3 2 6 0 F ile d 5 - 1 9 - 7 5 ;8 :4 5 a m ]

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2, 1975

22459

NOTICES

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT

S e t t l e m e n t C o sts

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

T h e c o n te n t o f th is b o o k le t h a s b e e n p r e ­
p a r e d , p r e s c r i b e d a n d a p p r o v e d b y t h e U .S .
D e p a r tm e n t o f H o u s in g a n d U r b a n D e v e lo p ­
m e n t, a s re q u ire d b y s e c tio n 5 o f th e R e a l
E s ta te S e ttle m e n t P r o c e d u r e s A c t o f 1974
( P u b . L . 9 3 - 5 3 3 ), e ff e c tiv e o n J u n e 20, 1975.
T h is p u b lic a tio n m a y b e re p rin te d . H o w ­
e v e r, in n o c a se m a y a n y c h a n g e , d e le tio n , o r
a d d itio n b e m a d e in its c o n te n t.
F o r s a le b y t h e S u p e r in t e n d e n t o f D o c u ­
m e n ts ,
U .S .
G o v ern m en t
P rin tin g
O f f ic e ,
W a s h i n g t o n , D .C . 2 0 4 0 2 .

[D o c k e t N o. N -7 5 -3 1 1 ]

REAL ESTATE SETTLEM ENT COSTS
Special Information Booklet
Notice is hereby given th a t H UD h a s
p rep ared the booklet, “ S ettlem en t C o sts”
p u rsu an t to Section 5 (a ) of the R e a l E s ­
ta te Settlem en t Procedures A ct of 1974.
Section 5 (a ) requires HUD to prepare
an d distribu te to len ders who m ake fe d ­
erally related m o rtgage loan s a special
in form ation booklet to better inform p e r­
sons borrow ing money to finance the
p urch ase of resid en tial real e sta te co n ­
cerning the settlem en t process. The
booklet exp lain s the purpose of each cost
involved in a settlem en t, reproduces and
exp lain s the sta n d a rd d isclo su re /settle­
m ent form required by sections 4 an d 6 of
the Act, discusses such ab uses a s u n fa ir
p ractices an d u n reason ab le ch arges, an d
exp lain s choices availab le to hom ebuy­
ers in sh opping fo r settlem en t services.
Section 5 (c) of the Act requires each
lender which m ak es fed erally related
m ortgage loan s to provide the booklet
to each person su bm ittin g an app lication
to borrow m oney to fin ance the p urch ase
of residen tial real estate. T h e lender is
required to provide the booklet a t the
tim e it receives the application .
T o insure th a t each fed erally related
m o rtgage lender h a s a sufficient supply
of booklets on han d on the effective date
of the Act, Ju n e 20, 1975, the D e p a rt­
m ent will provide an in itial supply of
booklets for lender use a t each HUD A rea
an d In su rin g Office an d expects th a t the
booklets will be availab le in early Ju n e.
L enders m ay pick u p a lim ited supply
from these offices b u t no m ail or tele­
phone orders can be accom m odated.
A fter this in itial distribution, add ition al
supplies of the booklet will be on sale
through the G overnm ent P rin tin g Office
a n d m u st be p aid fo r by the lender.
T h is booklet (1) m ay be reproduced
a n d distribu ted by lenders, using a cover
of th eir own design (which m ay b ear
the n am e of the le n d e r), w ithout fu rth er
approval by H U D ; or (2) len ders m ay
p rin t an d distribute booklets approved
by the S ec retary a s to form an d content.
In the form er case, it is n ot perm issible
to m ake any ch ange, deletion, or a d d i­
tion in the content of the booklet a s p re­
p ared by HUD. L en d ers desiring to tak e
a d v an tage of the la tte r option should so
request in w riting and su b m it proposed
booklets for review to the Office of G en ­
eral Counsel, D ep artm en t of H ousing and
U rban D evelopm ent, R oom 2253, 451 7th
Street, SW ., W ashington, D.C. 20410.
A copy of the conten ts of the booklet
which m ay be reproduced by lenders is
set forth a s an app en dix to th is notice.
D a v id

M .

de

CONTENTS
F o re w o rd
H o m e L o a n F in a n c in g
D is c lo s u re /S e ttle m e n t S ta te m e n t
A d v a n c e D is c lo s u r e
U n f a ir P ra c tic e s a n d U n re a s o n a b le
n e c e s s a r y C h a r g e s t o A v o id
E sc ro w A c c o u n ts
P r e v io u s S e llin g P r ic e D is c lo s u r e
J u ris d ic tio n o f C o u rts
T r u t h i n L e n d in g D is c lo s u re

or

U n­

FOREWORD
Y o u a re p la n n in g to b u y a h o m e. W h en
y o u d o , y o u w ill p r o b a b ly m a k e a d o w n p a y ­
m e n t a n d fin a n c e th e b a la n c e o f th e p u r c h a s e
p ric e w ith a lo a n s e c u re d b y a m o rtg a g e o n
y o u r hom e.
B e fo re y o u ta k e p o s s e s s io n o f y o u r h o m e ,
a c lo s in g o r s e t t l e m e n t w ill o c c u r a t w h ic h
o w n e r s h ip o f t h e p r o p e r t y w ill b e t r a n s f e r r e d
to y o u , a n d y o u r o b lig a tio n to re p a y th e
m o r t g a g e l o a n w ill b e c o m e e ff e c tiv e . T h e
te r m s a n d c o n d itio n s o f th e lo a n — in te r e s t
ra te , m o n th ly p a y m e n t, a n d th e r e p a y m e n t
p e r io d — a r e s p e c if ie d i n t h e d o c u m e n t s s ig n e d
b y y o u . T h e s e in c lu d e a n o te e v id e n c in g th e
lo a n f o r t h e u n p a id p u r c h a s e p r ic e , a m o r t ­
g a g e p la c in g a lie n o n y o u r h o m e , a n d o th e r
d o c u m e n ts .
I n s o m e S t a te s , i t is t h e c u s to m f o r t h e
b u y e r a n d s e lle r to a tt e n d t h e s e tt le m e n t i n
p e rs o n ; i n o t h e r s i t is h a n d le d a u to m a tic a lly
b y a n e s c ro w a g e n t w h e n a ll p a p e rs a n d f u n d s
h a v e b e e n d e p o s ite d w ith h im .
A t t h e c lo s in g o r s e ttle m e n t, b o th y o u a n d
t h e s e lle r w ill h a v e to p a y c e r t a in c h a rg e s
in c id e n t to tra n s fe r rin g title to re a l e s ta te
and
o b ta in in g
th e
m o rtg a g e lo a n . T h e s e
c h a rg e s
a re
c a lle d
“ s e ttle m e n t c o s ts ” o r
“ c lo s in g c o s ts ” .

d e e d o f t r u s t ) w h ic h y o u m u s t s ig n , w h ic h
p le d g e s t h e h o m e a s s e c u r ity fo r r e p a y m e n t
o f th e lo a n . I f y o u fa il to re p a y th e lo a n o r
c o m p ly w ith th e te r m s a n d c o n d itio n s o f th e
m o rtg a g e , t h e le n d e r c a n i n i t i a t e f o re c lo s u r e
o f t h e l o a n w h ic h w o u ld le a d t o s a le o f y o u r
h o m e a t a p u b lic a u c tio n to s a tis fy t h e d e b t.
I n a h o m e m o rtg a g e tra n s a c tio n , y o u p r o m ­
ise
to
re p a y
th e
lo a n
and
in te re s t
in
m o n th ly in s ta llm e n ts a t th e in te r e s t r a te a n d
o v e r t h e p e rio d o f tim e s p e c ifie d i n t h e
m o rtg a g e c o n tr a c t. I n th e e a rly y e a rs w h e n
y o u r d e b t is la r g e s t, m o s t o f t h e m o n th ly
p a y m e n t go es fo r in te r e s t. T h e a m o u n t a p ­
p lie d to th e o u ts ta n d in g d e b t g r a d u a lly i n ­
c re a s e s so t h a t i n t h e fin a l y e a rs o f th e
m o rtg a g e m o s t o f th e p a y m e n t g o e s to p r in ­
c ip a l a n d le s s t o I n te r e s t . T h i s is k n o w n a s a n
a m o rtiz e d
m o rtg a g e , a n d m o s t m o rtg a g e s
a re w ritte n th is w ay.
I n s o m e S ta te s , th e s e c u r ity in s tr u m e n t
in s te a d o f b e in g a m o rtg a g e is a d e e d o f t r u s t
u n d e r w h ic h th e b o rro w e r d e e d s th e p ro p e rty
to a tr u s te e . N o rm a lly , th e te r m s o f a d e e d
o f t r u s t a re s u b s ta n tia lly th e s a m e a s th o se
o f a m o rtg a g e .
H u s b a n d a n d w ife o f te n t a k e n t i t l e t o t h e i r
h o m e a s jo in t te n a n ts w ith r ig h t o f s u rv iv o r­
s h ip . Y o u m a y w is h t o s e e k le g a l a d v ic e o n
th is a n d o th e r m a tte r s . T h e m a n n e r in w h ic h
y o u ta k e title to th e h o m e y o u b u y c a n h a v e
im p o r ta n t in c o m e ta x , e s ta te p la n n in g , a n d
o th e r co n seq u en ces.
DISC LO SUR E/SETTLEM ENT STATEM ENT

H OM E LOAN FINA NC ING

T h e R e a l E s ta te S e ttle m e n t P ro c e d u re s A ct
o f 1974 (P u b . L . 9 3 -5 3 3 ) r e q u ir e s u s e o f a
s ta n d a r d f o rm fo r a d v a n c e d isc lo s u re o f s e t­
tle m e n t c o s ts a n d to r e c o r d a c tu a l c h a rg e s
in c u r r e d a t s e ttle m e n t in a ll m o rtg a g e t r a n s ­
a c tio n s in v o lv in g fe d e r a lly r e la te d lo a n s .
T h e s a m e f o r m is u s e d f o r b o t h a d v a n c e
d is c lo s u re a n d s e ttle m e n t a n d is re p r o d u c e d
o n t h e f o llo w in g p a g e s t o a c q u a i n t y o u w ith
it. S e ttle m e n t c o s t ite m s a re n u m b e r e d to
c o rre s p o n d w ith th e a c c o m p a n y in g e x p la n a ­
t io n o f e a c h ite m . T h e lis tin g o f th e s e ite m s
o n t h e fo rm d o e s n o t im p ly t h a t a n y p a r ­
t i c u l a r c h a r g e l is te d is o r s h o u ld b e m a d e i n
a g iv e n g e o g ra p h ic a re a . E v e n in a g iv e n g e o ­
g r a p h ic a re a , y o u m a y f in d t h a t d iff e re n t
le n d e rs a n d p r o v id e r s o f s e ttle m e n t s e rv ic e s
v a ry a s to w h e th e r th e y m a k e c e r ta in c h a rg e s
a n d as to th e a m o u n t o f th e c h a rg e . Y o u m ay
w is h to “ s h o p a r o u n d ” .
S o m e s e ttle m e n t c o s ts ty p ic a lly a r e c h a rg e d
to th e b u y e r. O th e rs u s u a lly a re th e re s p o n s i­
b i lity o f t h e s e lle r. A lth o u g h lo c a l c u s to m
a n d p r a c tic e s o f te n d ic ta te w h ic h a r e th e
b u y e r ’s a n d w h i c h t h e s e l l e r ’s c o s t s , t h e r e
a r e n o h a r d a n d f a s t r u le s t h a t a p p ly , a n d
i n m o s t c a s e s t h e b u y e r a n d s e lle r c a n n e g o ­
t i a t e a s t o w h o w ill p a y s p e c if ic s e t t l e m e n t
c h a rg e s . Y o u c a n a ls o n e g o tia te w ith p r o ­
v id e rs o f s e ttle m e n t s e rv ic e s a s to w h e th e r
e a c h c h a rg e w ill b e m a d e a n d th e a m o u n t.
Y o u s h o u ld b e c h a rg e d o n ly f o r s e rv ic e s a c ­
tu a lly p e rfo rm e d , a s re q u ire d b y s e ttle m e n t
p r a c tic e s i n a p a r t i c u l a r lo c a lity .
1 . Contract Sales Price. T h i s i s t h e p r i c e o f
t h e h o m e a g r e e d t o i n t h e s a le s c o n tr a c t
b e tw e e n b u y e r a n d s e lle r.
2 . Personal Property. T h o s e i t e m s , s u c h a s
c a rp e ts , d ra p e s , o r a p p lia n c e s , w h ic h th e s e ll­
e r tra n s fe r s w ith th e h o m e , m a y b e p a id fo r
b y t h e b u y e r a t s e tt le m e n t. W h e n t h e s a le s
c o n tr a c t is m a d e , y o u s h o u ld m a k e s u re t h a t
ite m s to b e tr a n s f e r r e d a r e d e s c rib e d . T h e
s a le s c o n t r a c t s h o u ld s t a t e w h e t h e r s u c h
ite m s a r e i n c l u d e d i n t h e s a le s p r ic e .
3 . S ettlem en t Charges. T h i s i s t h e t o t a l
a m o u n t o f th e s e ttle m e n t c h a rg e s to b e p a id
b y th e b u y e r. T h e s e c h a rg e s a r e ite m iz e d o n
p a g e 2 o f th e fo rm .

T h e h o m e p u r c h a s e lo a n is e v id e n c e d b y
y o u r s ig n a tu re o n a n o te o r b o n d , a n d th e
l o a n ( y o u r d e b t ) is s e c u r e d b y a m o r tg a g e ( o r

4 ,9 . A dju stm en ts
or Pro-rations. T h e s e
a m o u n ts re p re s e n t p ro -ra te d a d ju s tm e n ts o f
c e r t a in c o s ts , s u c h a s r e a l e s t a t e ta x e s , u t i l ­
itie s , a n d f u e l. S u c h a d j u s t m e n t s a r e o f t e n

T h is b o o k le t h a s b e e n p re p a re d to in fo rm
y o u , t h e b u y e r, a b o u t t h e n a t u r e a n d c o s ts
o f t h e s e t t l e m e n t p r o c e s s . A s r e q u i r e d b y la w ,
t h is b o o k le t is g iv e n t o y o u b y a le n d in g
i n s t it u t io n a t t h e tim e y o u a p p ly fo r a m o r t­
g a g e lo a n to f in a n c e t h e p u r c h a s e o f a o n e - to
fo u r- f a m ily
re s id e n tia l
d w e llin g .
A t th is
s ta g e , y o u h a v e s e le c te d t h e h o m e y o u w a n t
to b u y . Y o u m a y h a v e a lr e a d y re a c h e d i n ­
f o r m a l a g r e e m e n t w ith a s e lle r o r e v e n s ig n e d
a s a le s c o n tr a c t a n d m a d e a d e p o s it ( “ e a r n e s t
m o n e y d e p o s it” ) in d ic a tin g y o u r s e rio u s i n ­
te n tio n to b u y — a d e p o s it w h ic h c o u ld b e
fo rf e ite d s h o u ld y o u f a il to c o m p le te y o u r
p u rch ase.
T h is b o o k le t is in te n d e d t o a c q u a i n t y o u
w ith th e a p p ro p r ia te p ro c e d u re s a n d c h a rg e s
f o r s e tt le m e n t s e rv ic e s w h ic h y o u w ill e n ­
c o u n te r
in
c lo s in g
your
hom e
p u rch ase
tra n s a c tio n .
F o r a n s w e r s t o s p e c if ic q u e s t i o n s o r f o r
in fo r m a tio n o n m o rtg a g e le n d in g a n d s e ttle ­
m e n t p r a c tic e s i n y o u r lo c a lity , y o u m a y
w a n t t o c o n s u lt a S t a t e o r lo c a l c o n s u m e r
a f f a ir s a g e n c y , a n a tt o r n e y , a le g a l a id s o c ie ty ,
o r t h e lo c a l r e a l e s ta te b o a rd .

W ild e ,

Acting Assistant Secretary for
Housing
Production
and
Mortgage Credit, EHA Com­
missioner.




A H U D GUIDE

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

NOTICES

22460
m a d e in o rd e r to p ro
'h c o s ts i n o rd e r
to c h a rg e t h e s e lle r fo r
p e rio d h e o w n e d
th e
p ro p e rty
(u p to s e ttle m e n t)
and
to
c h a rg e th e b u y e r fo r th e p e rio d a f te r s e ttle ­
m e n t. I te m 4 s ta te s a m o u n ts fo r w h ic h th e
b u y e r c o m p e n s a te s t h e s e lle r. I te m 9 s ta t e s
a m o u n ts f o r w h ic h t h e s e lle r c o m p e n s a te s
t h e b u y e r. A s a n e x a m p le , w h e re s e ttle m e n t
o c c u r s O c to b e r 1, 1975, a n d t h e s e lle r h a s
p a id th e re a l e s ta te ta x e s in a d v a n c e fo r th e
e n tir e y e a r, a ty p ic a l a d ju s tm e n t w o u ld b e
f o r t h e b u y e r t o c o m p e n s a te t h e s e lle r f o r
o n e - f o u r th o f t h e r e a l e s ta te ta x e s f o r 1975,
t h a t is, t h e p e rio d f r o m O c to b e r 1 th r o u g h
D e c e m b e r 31. T h a t a m o u n t w o u ld b e sh o w n
a t I te m 4.
5 . Gross A m ount Due from Borrower. T h i s
is th e to ta l a m o u n t o f a ll c h a rg e s to th e
b u y e r i n c l u d e d i n i te m s 1, 2 , 3, a n d 4.
6 . D eposit or Earnest Money. T h i s i s t h e
a m o u n t o f m o n e y d e p o s ite d b y t h e b u y e r
u n d e r t h e c o n t r a c t o f s a le , u s u a ll y a t th e
t im e i t w a s s ig n e d .

7 . prin cipal A m oun t of L o a n (s).
th e
th e

a m o u n t o f m o rtg a g e m o n e y
b u y e r to p u rc h a se h is h o m e.

T h i s is
lo a n e d to

8 . Existing Loan(s)
Taken S u bject To.
T h i s s p a c e is u s e d f o r c a s e s i n w h ic h t h e
b u y e r is a s s u m in g o r ta k in g t it le s u b je c t to
a n e x is tin g lo a n o r o th e r lie n o n w h ic h h e
is e x p e c te d t o m a k e t h e p a y m e n ts .
1 0 . T otal A m ounts Paid B y or In Behalf
of Borrower. T h i s a m o u n t i s t h e s u m o f i t e m s
6, 7, 8, a n d 9 a b o v e w h ic h w ill b e a p p lie d to
re d u c e th e a m o u n t o f c h a rg e s to th e b u y e r
in ite m 5 ab o v e.
1 1 . Cash Required From (Payable To) Bor­
rower. T h i s i s t h e t o t a l a m o u n t o f c a s h w h i c h
t h e b u y e r w ill n e e d a t s e tt le m e n t ( s u b t r a c t
i te m 10 f r o m i t e m 5 ) . A t t im e o f a d v a n c e d i s ­
c lo s u r e t h i s is t h e e s ti m a t e d a m o u n t.
12.

Real E state Broker’s Sales Com pensa­

tion .

T h is c h a rg e c o m p e n s a te s t h e re a l e s ta te
b r o k e r o r b r o k e r s f o r s e rv ic e s in v o lv e d in
lis tin g a n d s e llin g th e p r o p e r ty , a n d is n o r ­
m a l l y t h e s e l l e r ’s o b l i g a t i o n t o p a y . T h i s
c o m m is s io n o r fe e m a y b e s p lit a m o n g m o re
t h a n o n e b r o k e r if e a c h p e rf o r m e d s e rv ic e s in
c o n n e c tio n w ith th e tra n s a c tio n , b u t n o p e r­
s o n m a y a c c e p t a n y p o rtio n , s p lit o r p e r ­
c e n ta g e o f s u c h c o m m iss io n o r fee o th e r th a n
fo r s e rv ic e s a c tu a lly p e rfo rm e d .
1 3 . Loan O rigination Fee. T h i s c o m p e n s a t e s
th e le n d e r fo r e x p e n se s in c u rre d in o rig in a t­
in g th e lo a n , p r e p a r in g d o c u m e n ts , a n d r e ­
la te d w o rk . W h e n s u c h a fee is c h a rg e d , it
is u s u a ll y a p e r c e n t a g e o f t h e f a c e a m o u n t
o f th e m o rtg a g e . I n F H A -in s u re d o r V A g u a r a n t e e d m o r tg a g e t r a n s a c t i o n s in v o lv in g
e x is tin g s tr u c tu r e s , th e fe e c h a rg e d th e b o r ­
ro w e r c a n b e n o m o re th a n o n e p e rc e n t o f
t h e m o rtg a g e a m o u n t. F o r e x a m p le , if y o u
a re a p p ro v e d fo r a V A -g u a ra n te e d lo a n o f
$ 3 0 ,0 0 0 , t h e o r i g i n a t i o n f e e c h a r g e d t o y o u
m a y n o t e x c e e d $3 0 0 . H o w e v e r, w h e n t h e
le n d e r m a k e s in s p e c tio n s a n d p a r tia l d is ­
b u r s e m e n ts d u r in g c o n s tr u c tio n o f a n e w
h o m e , b o th P H A a n d V A p e r m it a h ig h e r o rig ­
in a tio n fee , b u t n o t m o re t h a n 2 % % fo r
F H A - in s u r e d lo a n s o r 2 % fo r V A -g u a ra n te e d
lo a n s . T h e F a rm e rs H o m e A d m in is tr a tio n
d o e s n o t p e r m it a lo a n o r ig in a tio n fee .
1 4 . Loan D iscount Points. D i s c o u n t s o r
“p o in ts ” a re a o n e -tim e c h a rg e m ad e b y th e
l e n d e r to in c r e a s e i ts y ie ld ( t h e e ff e c tiv e i n ­
te r e s t r e t u r n o r in c o m e ) o n th e m o rtg a g e
lo a n . E a c h “ p o i n t ” is o n e p e r c e n t o f th e m o r t ­
g ag e a m o u n t.
I n F H A a n d V A tra n s a c tio n s , th e b u y e r
m a y n o t b e c h a rg e d a d is c o u n t b y th e le n d e r,
b u t t h e s e lle r m a y v o lu n te e r to p a y p o in ts
in o r d e r t o h e lp t h e b u y e r o b ta in f in a n c in g .
F o r e x a m p le , if a le n d e r c h a rg e s 4 p o in ts
o n a n F H A - i n s u r e d l o a n o f $ 3 0 ,0 0 0 , t h i s
a m o u n t s t o a d i s c o u n t o f $ 1 ,2 0 0 . Y o u , t h e
b u y e r, m a y p a y o n ly t h e lo a n o r ig in a tio n fe e
d e s c rib e d

in

n o te

13

If i t is a




VA o r FH A

tra n s a c tio n . D is c o u n ts a re n o t p e r m itte d o n
F a rm e rs H o m e A d m in is tr a tio n lo a n s .
1 5 . Appraisal Fee. T h i s c h a r g e c o m p e n s a t e s
th e le n d e r fo r a p ro p e rty a p p ra is a l m a d e b y
a n in d e p e n d e n t a p p ra is e r o r b y a m e m b e r of
t h e l e n d e r ’s s t a f f .
1 6 . C redit Report. T h e b u y e r ’s c r e d i t h i s ­
t o r y is o f t e n o b t a i n e d b y t h e l e n d e r a n d a
c h a rg e p a id to a c re d it b u r e a u fo r a s c e r ta in ­
i n g t h e s t a t u s o f t h e b u y e r ’s c r e d i t m a y b e
c o lle c te d , u s u a lly f r o m t h e b u y e r.
1 7 . Lender’s In spection Fee. T h i s c h a r g e
c o v e rs o n ly in s p e c tio n s m a d e b y p e rs o n n e l o f
t h e le n d in g i n s titu tio n a t its d is c re tio n . P e s t
o r o th e r in s p e c tio n s m a d e b y c o m p a n ie s o th e r
t h a n th e le n d e r a re d e s c rib e d in n o te 31.
1 8 . Mortgage Insurance A pplication Fee.
T h is c o v e rs th e c o s t o f a n F H A o r V A a p ­
p ra is a l, w h ic h in a n F H A lo a n is in c lu d e d in
a m o rtg a g e in s u r a n c e a p p lic a tio n fe e . F o r
c o n v e n tio n a l lo a n s i t m a y c o v e r a p p lic a tio n
fe e s w h e n c h a rg e d b y p r iv a te m o rtg a g e i n ­
s u re r s . I n t h e c a se o f a n F H A - in s u r e d m o r t ­
g ag e, th e a m o u n t o f th is c h a rg e is s e t b y H U D
R e g u la tio n s a n d m a y b e c h a rg e d to th e b u y e r.
T h e b u y e r in a V A -g u a ra n te e d lo a n m a y n o t
b e c h a rg e d a n a p p ra is a l fee u n le s s id e n tifie d
b y n a m e i n t h e r e q u e s t f o r V A ’s a p p r a i s a l .
1 9 . A ssum ption Fee. I n a c a s e w h e r e t h e
b u y e r a s s u m e s t h e s e l l e r ’s e x i s t i n g m o r t g a g e
o n t h e p r o p e r t y , t h e l e n d e r ’s c h a r g e s f o r
p ro c e s s in g t h e a s s u m p tio n a re e n te r e d h e re .
2 0 . Prepaid In terest. T h i s c h a r g e c o v e r s
i n te r e s t w h ic h w ill a c c r u e f r o m t h e d a te o f
s e ttle m e n t to th e b e g in n in g o f th e p e rio d
c o v e re d b y y o u r firs t m o n th ly p a y m e n t. F o r
e x a m p le , if y o u r m o rtg a g e p a y m e n t is d u e
o n th e 1 st o f e a c h m o n th , b u t s e ttle m e n t
o c c u rs o n A p ril 20, t h e p r e p a id i n te r e s t a t
s e ttle m e n t w ill c o v e r t h e p e rio d f ro m A p ril 20
t o A p ril 30 if y o u r f ir s t m o n th ly m o rtg a g e
p a y m e n t is d u e o n J u n e 1 s t. T h u s y o u r
J u n e 1 p a y m e n t w ill n o t h a v e t o in c lu d e a n
e x tr a a m o u n t o f in te r e s t fo r th e p e rio d b e fo re
M a y 1.
2 1 . Prepaid Mortgage Insurance Premium .
T h is is th e p o r tio n o f th e p re m iu m p re p a id
b y th e b u y e r a t s e ttle m e n t fo r m o rtg a g e i n ­
s u ra n c e . T h is ty p e o f in s u r a n c e is r e q u ir e d
w h e n F H A o r a p r iv a te m o rtg a g e in s u r a n c e
c o m p a n y c o v e rs t h e le n d e r a g a in s t lo ss i f t h e
b u y e r f a ils to m e e t t h e m o rtg a g e o b lig a tio n .
M o rtg a g e in s u r a n c e p r e m iu m s a re r e q u ir e d
fo r a ll F H A -in s u re d lo a n s ( b u t n o t f o r VA
lo a n g u a ra n te e s ), a n d m a y b e re q u ire d o n
a c o n v e n tio n a l lo a n .
T h is ty p e o f in s u r a n c e s h o u ld n o t b e c o n ­
f u s e d w i t h m o r tg a g e life , c r e d i t lif e , o r d i s ­
a b il i ty i n s u r a n c e d e s ig n e d t o p a y o ff a m o r t ­
g a g e in t h e e v e n t o f p h y s ic a l d is a b ility o r
d e a th o f t h e b o rro w e r. S u c h in s u r a n c e Is
a v a ila b le b u t u s u a lly n o t r e q u ir e d b y le n d e rs .
2 2 . Prepaid Hazard Insurance Prem ium .
T h is is th e p o r tio n o f th e p re m iu m p re p a id
b y th e b u y e r a t s e ttle m e n t fo r p u rc h a s e fro m
a p r iv a t e c o m p a n y o f i n s u r a n c e a g a in s t lo s s
d u e t o fire , w i n d s to r m , a n d n a t u r a l h a z a r d s .
T h is c o v e ra g e m a y b e in c lu d e d in a H o m e ­
o w n e r s P o lic y w h ic h i n s u r e s a g a in s t p o s ­
s ib le a d d it i o n a l r is k s , s u c h a s p e r s o n a l lia b il­
ity a n d th e f t.
A h a z a r d i n s u r a n c e o r h o m e o w n e r ’s p o l i c y
d o e s n o t p r o te c t y o u a g a in s t lo ss c a u s e d b y
f lo o d in g . I n s p e c ia l f lo o d - p r o n e a r e a s i d e n t i ­
f ie d b y H U D , y o u m u s t c a r r y f lo o d i n s u r a n c e
o n y o u r h o m e. S u c h in su ra n c e m ay b e p u r ­
c h a s e d a t lo w f e d e r a lly s u b s id iz e d r a t e s in
c o m m u n itie s e lig ib le u n d e r
th e
N a tio n a l
F lo o d I n s u r a n c e A c t. C o n t a c t a lo c a l h a z a r d
in s u r a n c e a g e n t c o n c e r n in g e lig ib ility in y o u r
case.
2 3 . Reserves D eposited w ith Lender. T h e s e
f u n d s a re p la c e d b y th e b u y e r in a n “e s ­
c ro w ” o r “ im p o u n d ” a c c o u n t m a in ta in e d b y
t h e le n d e r to a s s u re a n a d e q u a te a c c u m u la ­
tio n o f f u n d s to m e e t c h a rg e s fo r re a l e s ta te
ta x e s a n d h a z a rd in s u ra n c e w h e n th e y b e ­
c o m e d u e ; a n d a ls o , if a p p lic a b le , f o r m o r t ­
g a g e I n s u ra n c e , a n n u a l a s se s s m e n ts , h o m e ­
o w n e r s ’ a s s o c i a ti o n f e e s , o r flo o d i n s u r a n c e .

(T h e s e re s e rv e s a re e x p la in e d in m o re d e ta il
la te r.)
T h e s e re s e rv e s m a y b e h e ld in n o n - in te r e s t
b e a r in g a c c o u n ts . H o w e v e r, c e r t a in S t a te s n o w
re q u ir e le n d e rs to p a y in te r e s t o n th is m o n e y ,
a n d le n d e r s i n o t h e r S ta te s m a y b e w illin g
to d o th is v o lu n ta rily .
2 4 . S ettlem en t, Closing, or Escrow Fee. T h i s
c h a rg e m ay b e m a d e fo r h a n d lin g a n d s u p e r­
v isin g th e s e ttle m e n t tra n s a c tio n . T h e s e t­
tle m e n t m a y b e c o n d u c te d b y th e le n d e r, a
re a l e s ta te b ro k e r, a title c o m p a n y in so m e
S ta te s , a n e sc ro w a g e n t in s o m e S ta te s , o r a n
a tto r n e y . T h e s e lle r a n d b u y e r m a y n e g o tia te
r e g a r d in g w h o p a y s o r w h e t h e r t h e c h a r g e is
s h a r e d b e tw e e n th e m . T h e a m o u n t o f th e
c h a rg e m a y b e n e g o tia te d w ith th e p r o ­
v id e r o f t h e s e rv ic e . I n
a V A -g u a ra n te e d
lo a n , th is fe e c a n n o t b e c h a rg e d to t h e b u y e r
w h e n t h e b u y e r is a s s e s s e d t h e 1 % o r i g i n a ­
tio n fee .
2 5 . Title Charges. T h e s e c h a r g e s c o v e r t h e
c o s ts o f t i t l e s e a r c h a n d e x a m in a tio n o f
p u b lic r e c o rd s o f p re v io u s o w n e rs h ip a n d
s a le s to e s ta b l is h t h e r i g h t o f t h e s e lle r to
co n v ey th e p ro p e rty to th e b u y e r. A se a rc h
a n d e x a m in a tio n a re p e rfo rm e d to d e te rm in e
w h e th e r t h e s e lle r h a s g o o d t it le to th e p r o p ­
e r ty t h a t h e c a n tr a n s f e r to t h e b u y e r, a n d to
d is c lo s e a n y m a t t e r s o n r e c o r d t h a t c o u ld
a d v e rs e ly a ff e c t t h e b u y e r, t h e le n d e r, o r
o th e rs w ith a n in te r e s t in th e p ro p e rty . E x ­
a m p le s o f th e s e p ro b le m s a re u n p a id m o r t­
g a g e s, j u d g m e n t o f ta x lie n s , a p o w e r lin e
e a s e m e n t o r a ro a d r ig h t-o f - w a y t h a t c o u ld
lim it u s e a n d e n jo y m e n t o f th e re a l e s ta te
b y th e b u y e r.
I n s o m e p a r ts o f th e n a tio n , a title s e a rc h
c u s to m a rily ta k e s th e fo rm o f a n “ a b s tr a c t” ,
w h ic h is a c o m p ila tio n in c l u d i n g c o p ie s o f
p e r t i n e n t d o c u m e n ts t h a t p r o v id e s a c o n ­
d e n s e d h is to r y o f p r o p e r ty o w n e rs h ip a n d
r e la te d m a tte r s . I n o t h e r p la c e s , t i t l e s e a r c h e s
a re p e rfo rm e d b y e x tr a c tin g re la te d in fo r m a ­
tio n fro m th e p u b lic re c o rd w ith o u t a s s e m ­
b lin g a b s tr a c ts . E ith e r w a y , i t t h e n is n e c e s ­
s a ry fo r a n e x p e rt e x a m in a tio n to b e m a d e o f
t h e e v id e n c e a c c u m u la te d i n t h e s e a r c h in
o rd e r to d e te rm in e s ta tu s o f title a s sh o w n
b y th e p u b lic re c o rd .
D e p e n d in g o n lo c a l c u s to m , t i t l e e x a m in a ­
tio n s n o r m a lly a re m a d e b y a tto r n e y s o r t i t l e
c o m p a n y e m p lo y e e s. T h r o u g h a t i t l e s e a r c h
a n d e x a m in a tio n ;, l a n d t i t l e p r o b le m s o f
re c o rd a re d isc lo s e d in a d v a n c e so th e y c a n
b e c le a r e d u p , w h e n p o s s ib le , b e f o r e a t r a n s ­
a c ti o n is c o m p le te d .
2 6 . Notary Fees. T h i s c h a r g e m a y b e m a d e
f o r t h e s e rv ic e s o f a n o t a r y in a u t h e n t ic a t in g
s ig n a tu re s to th e v a rio u s d o c u m e n ts in th e
tr a n s a c tio n . I n a V A -g u a ra n te e d lo a n , th is
fee c a n n o t b e c h a rg e d to a b u y e r in th e e v e n t
t h e b u y e r is c h a r g e d a 1 % o r i g i n a t i o n fe e .
2 7 . A ttorn ey’s Fees. T h e s e i n c l u d e c h a r g e s
w h ic h th e le n d e r m a y re q u ir e t h e b u y e r to
p a y fo r le g a l s e rv ic e s t o th e le n d e r in c o n ­
n e c tio n w ith
th e tra n s a c tio n . T h e b u y e r
s h o u ld n o t a s s u m e t h a t h e is r e p r e s e n te d
b y a n a tto r n e y h ire d b y th e le n d e r w h o p r e ­
p a re s th e d o c u m e n ts a n d h a n d le s th e s e ttle ­
m e n t . I n a V A - g u a r a n t e e d l o a n , t h i s l e n d e r ’s
a tto rn e y fee c a n n o t b e c h a rg e d if th e b u y e r
is c h a r g e d t h e 1 % o r i g i n a t i o n f e e .
T h e b u y e r a n d s e lle r m a y e a c h r e t a i n a t ­
to rn e y s to re p re s e n t th e m a n d m a y p a y th e
fe e s a t t h e s e ttle m e n t, in w h ic h c a se th e s e
fe e s a ls o a p p e a r o n t h i s p a r t o f t h e f o rm .
I n s o m e S ta te s , a tt o r n e y s p r o v id e b a r r e la te d title in s u ra n c e a s p a r t o f th e ir s e rv ­
ic e s t o t h e b u y e r f o r t r a n s f e r o f t i t l e . T h e
a t t o r n e y ’s f e e i n t h i s c a s e m a y i n c l u d e t h e
title in s u ra n c e p re m iu m .
2 8 . T itle Insurance. A o n e - t i m e p r e m i u m
m a y b e c h a r g e d a t s e t t l e m e n t f o r a p o lic y
w h i c h p r o t e c t s t h e l e n d e r ’s i n t e r e s t i n t h e
p r o p e r ty a g a in s t la n d t it le p ro b le m s in c lu d ­
in g th o s e t h a t m ig h t n o t b e d isc lo s e d b y a
tit le s e a rc h a n d e x a m in a tio n . W h e th e r th e
b u y e r o r s e lle r p a y s f o r t h i s v a r ie s w i t h lo c a l
c u s to m .

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975




NOTICES
T h e b u y er m u st re q u e st a n d p ay fo r a n
a d d i t i o n a l o w n e r ’s p o l i c y i f h e w a n t s t h i s
p r o te c tio n fo r h is in te r e s t in t h e p ro p e rty .
T h e r e a r e m a n y a r e a s w h e r e a n o w n e r ’s p o l ­
ic y c a n b e o b t a i n e d a t a m o d e s t a d d it i o n a l
c h a rg e if is s u e d s im u lta n e o u s ly w ith a le n d ­
e r ’s p o l i c y . I n s o m e a r e a s , t h e s e l l e r p a y s
f o r t h e o w n e r ’s t i t l e i n s u r a n c e p o l i c y .
2 9 . G overnm ent
Transfer
Taxes and
Charges. T h e f e e s a n d t a x e s i n t h i s s e c t i o n
a re g e n e ra lly le v ie d b y S t a t e a n d / o r lo c a l
g o v e rn m e n ts w h e n p r o p e r ty c h a n g e s h a n d s
o r w h e n a m o r tg a g e l o a n is m a d e . D e p e n d in g
o n lo c a l c u s to m , th e s e c h a rg e s m a y b e p a id
b y t h e b u y e r , s e lle r, o r o th e r w is e s p l i t b e ­
tw e e n th e m .
3 0 . Survey. T h e l e n d e r o r a p a r t y t o t h e

*■

22461

tr a n s a c tio n m a y r e q u ir e a s u rv e y s h o w in g
th e p re c is e lo c a tio n o f th e h o u s e a n d lo t
lin e s .
31.
Inspections. T h i s p a r t o f t h e f o r m r e ­
c o rd s c h a rg e s fo r v a rio u s I n s p e c tio n s r e ­
q u ire d b y th e le n d e r o r a p a rty to th e tr a n s ­
a c tio n , s u c h a s th o s e f o r te r m ite a n d o th e r
p e s t in f e s ta tio n . I n a V A -g u a r a n te e d lo a n ,
th e b u y e r m a y n o t b e c h a rg e d fo r th e p e st
in s p e c tio n .
T h e r e m a y a ls o b e p r e - s a le in s p e c tio n s f o r
th e
b u y e r ’s b e n e f i t t o
e v a lu a te
h e a tin g ,
p lu m b in g ,
and
e le c tric a l e q u ip m e n t a n d
o v e ra ll s tr u c tu r a l s o u n d n e s s . T h e c h a rg e fo r
s u c h a n in s p e c tio n m a y in c lu d e a fee fo r
in s u r a n c e o r w a r r a n ty s e rv ic e s to b a c k - u p
th e in s p e c tio n .

3.

U.S. DEPARTMENT OF HOUSINC AND URBAN DEVELOPM ENT
’•

mj

4. 1 1 ; v a

DISCLOSURE/SETTLEMENT STATEMENT

6.
8.

// th e T ruth -in -L en din i> Act a p p l i e s to th is tr a n s a c tio n , a T ru th -in -L e n d in g

T Y P E O F LO A N :

2 . 17] FMHA

3 .r.1

CONV. UNINS.

St Q ; c o n v . in s .

F IL E N U M B ER

7.

LO A N N U M B E R

M O R T C . IN S. C A S E NO.

s ta te m e n t i s a tta c h e d a s pa&e 3 o f th is lorm.

settlement to show the actual co sts you have paid. The present copy of the form is.
[_ ] ADVANCE DISCLOSURE OF COSTS. Some items are estimated, and are marked " ( e ) ” . Some amounts may c h a n g e if
the settlement is held on a date other than the date estimated below. T he preparer of this form is not responsible fo r e r r o r s
or changes in amounts furnished by others.
[ . STATEMENT OF ACT U AL COSTS. Amounts paid to and by the settlement agent are shown. Items marked
were paid outside the closin g, they are shown here for informational purposes and are not included in totals.
OF BORROWER

G.

P R O P E R T Y L O C A T IO N

S E T TL E M E N T AG ENT
I COMMITMENT

J.

100.

SU M M A RY O F B O R R O W E R 'S T R A t S A C T IO N

K.

CROSS AMOUNT DU E FROM BO RRO W ER:

(

0 7

Adjustments for items paid by seller in advance:
405. City/town taxes
406. County taxes
407. Assessments
408.
409.
410.
411.

Adjustments for items paid by seller in advance:^
106. City/town taxes

to

107. County taxes
108. Assessments
109.
110.
111.
112.

to
to
,0
to
to
to

rK T /

\

420.

)

CROSS AMOUNT DUE FROM BORROW ER:

200.

AMOUNTS P A ID B Y OR IN B E H A L F O F BO RRO W ER:

& ■-

___________

•

Cn)

220

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

f

(0)
\t)

Credits to borrower for items unpaid by seller:
510. City/town toxes
511. County toxes
512. Assessments
513.
514.
515.

T O TA L AMOUNTS P AID BY OR IN B E H A L F 0 F ^ * ^

(10s

BORROWER

300.

/
\

CASH A T S E T T L E M E N T R E O U IR E D FROM OR P A Y A B L E
TO BO RRO W ER:

520.

301. Gross amount due from borrower
{ from lin e 120)

302. Less amounts paid by or in behalf of borrower
{

(from line 220)

303.

CASH

SELLER

503. Settlement charges to seller

UJ

-

to
to
to
to
to
to
to

GROSS AMOUNT D U E TO S E L L E R

500. RED U C TIO N S IN AMOUNT DUE TO
501. Payoff of first mortgage loon
502. Payoff of second mortgoge loan

Credits to borrower for items unpoid by selierA
206. City/town toxes
207. County taxes
208. Assessments
209.
210.
211.
212.

to
to
to
to
to
to
to

N O T E : T h e fo llo w in g 5 0 0 a n d 6 0 0 s e r i e s s e c t i o n s a r e n ot
r e q u ir e d to b e c o m p le te d w h e n t h i s lorm i s u s e d lo r a d v a n c e
d is c l o s u r e o l s e ttle m e n t c o s t s p rio r t o s e ttle m e n t.

fS)

120.

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

SELLER :

402. Personal property
403.
404.

^3^

10 3. Settlement charges to borrower
(from Iin .* ItOO. See lion L )
104.
105.

SU M M A R Y O F S E L L E R ' S T R A N S A C T IO N

400. GROSS AMOUNT DU E TO
401. Contract soles price

101. Controct sales price
102. Personal property

ADVANCE DISCLOSURE

SETTLEM ENT

S E T T L EM EN T

to
to
to
to
to
t<5

T O T A L RED U CTIO N S IN AMOUNT D U E TO S E L L E R :

60 0 .

CASH TO S E L L E R FROM S E T T L E M E N T :

601.

Gross amount doe to seller
( from tin e 420J

)

602. Less total reductions in omount due to

REOUIRED FROM; OR

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

V

603.

(

)

CASH TO S E L L E R FROM S E T T L E M E N T

HUD-1 (5-75)

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

NOTICES

22462

PAID FROM

l . se t t l e m e n t ch an ges

. 7C0.
701

SALEV'B RO XER'S COMMISSION

bat*ionprlc#

$

*

PAID FROM
SELLER'S
FUKDS

BORROWER’ S
FUNDS

%

Total commission paid by seller
Dltfiston of co.-n.Titssiort os follows:

;o 2 .

$

703. $

»<>

*

70.:.
800. ITEMS PAYABLE IN CONNECTION WITH LOAM.
iJ t.

Leon Crimination fee

80J.
SG-t.
305.
SC5.
307.
' ' 802?.
a :? .
8i>
?.
900.

5c

Aopraiial Fee to
Credit Report to
Lender's inspection fee
Mortgage Insurance application fee to
Assumption/refinancing fee

ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE.

001.
902.
903.

Interest from
to
Mortgage insuronce premium for
Hazard insurance premium for

904.
905.
1000.

/Joy

yrs. to

RESERVES DEPOSITED WITH LENDER FOR:

1001. Haiard insurance
1002 Mortgage insuronce
1003. City property taxes
1004. County property taxes
1005. Annual assessments
1006,
1007.
1008..
1100.

?$
mo. to
yrs. to

mo. 0$
mo. $$
mo. g$
mo. 9$
mo. $$
mo. (3$
mo. SS
mo. tS

/mo.
/mo.
/mo.
/ mo.
/ mo.
/ mo.
/mo.
/mo.

T IT L E CHARGES:

1101.

Settlement or closing Jee to

1102.
U03.

Abstract or title search to
Title examination ro

1104.
1105.
1106.
1107.

Title insuronce binder to
Document preparation to
Notary fees to
Attorney’ s Fees to

1108.

Title insurance to

(in c lu d e s a b o ve item s i\o .:

)

fin clu d es abo ve itrm < !\ro.:

J

1109. Lender's coverage $
tuO. Owner’ s coverage $
nn.
1112.
1113.
12'.’0.

Recording fees:

’ 103.

Stole i«x/«toniDJ: D*«d S .......

1300.

Deed $

; Mortgage $
; Marljoje $

Releases $
...............

...

-

-----------

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

Survey to

1303.
1301.
1400.

T O T AL SETTLEMENT CHARGES 'c n u r c j vn U t e t 103 a n l S n j . f r r t i m i 1 anil K )

NOTE:

U n d er c e r ta in c ir c u m s ta n c e s th e borro w er a n d s e l l e r m a y b e p e r m itte d to w a iv e t h e 1 2 -d a y p e r io d w h ic h m u st n o r m a lly

occur b e tw e e n a d v a n c e d i s c l o s i r e a n d s e ttle m e n t. In th e e v e n t su c h a w a iv e r i s m a d e , c o p i e s o f th is s ta te m e n ts o l w a iv e r ,
e x e c u t e d a x p r o v id e d in th e r e g u la tio n s o l th e D e p a rtm e n t o l H o u sin g a n d U rban D e v e lo p m e n t, s h a l l b e a tt a c h e d

Coa n d m a d e a

p u t t o f I h i s form w h a n t h e lortn i s u s e d a d a s e ttle m e n t s ta te m e n t.

MJO-f (5-75)
ADVANCE DISCLOSURE
The
S e ttle m e n t/D is c lo s u re
S ta te m e n t
ite m iz e s e a c h s e ttle m e n t c o s t c h a rg e d to
t h e b u y e r a n d e a c h c h a r g e d t o t h e s e lle r.
A d v a n c e d is c lo s u re s e rv e s a tw o -fo ld p u r ­
p o s e : (1 ) T o p ro v id e n o tic e o f t h e c a s h y o u
w ill n e e d a t s e tt le m e n t a n d (2 ) t o m a k e p o s ­
s ib le “ c o m p a r is o n s h o p p in g ” o f s e ttle m e n t
c h a rg e s so th a t y o u c a n a rra n g e te rm s m o st
f a v o r a b l e t o y o u . I f y o u d o n ’t “ s h o p a r o u n d ”
y o u w ill n o t s a v e m o n e y if t h e s a m e s e rv ic e s
a re o ffe re d e ls e w h e r e f o r le ss.
I t is im p o r ta n t t o r e a liz e t h a t a d v a n c e d is ­

tle m e n t tra n s a c tio n s b u t d o es n o t a ffe c t a n y
c o n tr a c tu a l a g re e m e n t w h ic h m a y a lr e a d y
h a v e b e e n m a d e b e tw e e n b u y e r a n d s e lle r.
T ry to o b ta in a s m u c h o f th is in fo rm a tio n
a s p o s s ib le p r io r t o s ig n in g a s a le s c o n tr a c t
f o r t h e h o u s e y o u in te n d to b u y . O r, if th e
s e lle r is a g re e a b le , y o u m a y w a n t t o m a k e
t h e s a le s c o n tr a c t c o n ti n g e n t u p o n y o u r a p ­
p ro v a l o f th e a d v a n c e d is c lo s u re s ta te m e n t.
O n c e y o u h a v e s ig n e d , y o u m a y n o t b e a b le
to re s c in d th e c o n tr a c t in th e e v e n t t h a t y o u
a re d is s a tis fie d w ith s o m e a s p e c t o f th e
t r a n s a c t i o n r e v e a l e d b y d i s c l o s u r e . I t Is in
y o u r I n te r e s t to c o n d itio n y o u r p u rc h a s e

c lo s u r e p ro v id e s f o r e a rlie r a n d m o re s y s te m ­

c o n tra c t o n

a tic

g a g e lo a n o n s p e c if ie d te r m s .

in f o r m a tio n a b o u t t h e c o s ts o f t h e s e t­




P R A C T IC E S A N D U N R E A S O N A B L E

OR

U N N E C E S S A R Y C H A R G E S T O AVOID

ADDITIO NAL SETTLEMENT CHARGES

1301.
'
'

U N F A IR

GOVERNMENT RECOROING AND TRANSFER CHARGES

1201.

T h e la w r e q u i r e s t h e le n d e r t o g iv e y o u a
c o p y o f t h e c o m p le te d a d v a n c e d is c lo s u re
s ta te m e n t a t th e tim e o f lo a n c o m m itm e n t.
I n m o s t c irc u m s ta n c e s th is s h o u ld b e n o t
l a t e r t h a n 12 c a l e n d a r d a y s b e f o r e t h e s e t t l e ­
m e n t d a te . N o rm a lly , t h e lo a n c o m m itm e n t
a n d a d v a n c e d isc lo s u re o c c u r se v e ra l w eek s
p r io r to s e ttle m e n t. I n th e c a se o f a lo n g ­
te r m c o m m itm e n t, s u c h a s t h a t o b ta in e d b y
a b u y e r o f a n e w h o m e u n d e r c o n s tr u c tio n ,
d is c lo s u re s h o u ld b e m a d e s h o rtly a f te r s ig n ­
in g t h e c o n tr a c t t o b u y t h e h o u s e . T y p ic a lly ,
t h is m ig h t b e in th e ra n g e o f 60 to 90 d a y s
b e fo re s e ttle m e n t.
I f t h e e x a c t c o s t o f a n y s e tt le m e n t se rv ic e
is n o t k n o w n in tim e to m e e t t h e d e a d lin e ,
t h e le n d e r m u s t p r o v id e a g o o d f a i t h e s tim a te
o f th e c h a rg e .
L e n d e rs a re p ro h ib ite d fro m c h a rg in g a
s p e c if ic f e e f o r t h e p r e p a r a t i o n a n d s u b m i s ­
s io n o f d is c lo s u re a n d s e ttle m e n t c o s ts s ta t e ­
m e n ts o r fo r th e in fo rm a tio n th e y m u s t p r o ­
v id e u n d e r t h e T r u t h i n L e n d in g A c t.
I f y o u r c ir c u m s ta n c e s a re s u c h t h a t y o u
w a n t to s e ttle a n d ta k e title to y o u r n ew
h o m e b e fo re th e le n d e r c a n m e e t h is 1 2 -d ay
a d v a n c e d is c lo s u re d e a d lin e , y o u m a y s ig n a
w a iv e r o f t h a t r e q u ir e m e n t. A d v a n c e d is ­
c lo s u re is in te n d e d to p r o te c t y o u r in te r e s ts ,
n o t h a m p e r o r d e la y y o u r p la n s , so y o u
s h o u ld c a re f u lly c o n s id e r b e fo re s ig n in g a
w a i v e r . E v e n i f y o u a g r e e t o w a i v e , H T JD
R e g u la tio n s r e q u ir e t h e le n d e r t o p r o v id e t h e
d is c lo s u re s ta te m e n t to y o u a t le a s t th re e
d a y s p r io r to th e d a te o f s e ttle m e n t.
E x c e p t in t h e c a se o f a w a iv e r, t h e le n d e r
m u s t m e e t th e a d v a n c e d isc lo s u re r e q u ir e ­
m e n t o r b e lia b le to y o u fo r a c tu a l d a m a g e s
o r $500, w h ic h e v e r is g r e a te r. I f c o u r t a c tio n
is n e c e s s a ry to e n fo rc e t h is lia b ility , th e
le n d e r m a y b e o r d e re d to p a y c o u r t c o s ts a n d
y o u r a t t o r n e y ’s f e e s a s s e t b y t h e c o u r t i f t h e
le n d e r lo se s t h e c a se . Y o u w o u ld p a y a t ­
t o r n e y ’s f e e s i n t h e e v e n t t h a t y o u l o s e t h e
c a se . A le n d e r w ill n o t b e h e ld lia b le f o r a
v io la tio n if h e c a n s h o w t h a t i t w a s n o t i n ­
t e n t i o n a l a n d r e s u l t e d f r o m a b o n a f id e e r r o r
in s p ite o f m a in te n a n c e b y th e le n d e r o f p r o ­
c e d u r e s a d o p te d t o a v o id s u c h e r r o r .

y o u r a b ility

to

o b ta in

a m o rt­

A p r in c ip a l fin d in g o f C o n g re ss in t h e R e a l
E s t a t e S e t t l e m e n t P r o c e d u r e s A c t o f 1 9 7 4 is
t h a t c o n s u m e rs n e e d p r o te c tio n fro m "* * *
u n n e c e s s a rily h ig h s e ttle m e n t c h a rg e s c a u se d
b y c e r ta in a b u s iv e p r a c tic e s t h a t h a v e d e ­
v e lo p e d i n s o m e a r e a s o f t h e c o u n tr y .” T h e
p o t e n t i a l p r o b le m s d is c u s s e d b e lo w m a y n o t
b e a p p lic a b le to m o s t lo a n s e ttle m e n ts , a n d
t h e d is c u s s io n is n o t i n te n d e d to d e te r y o u
fro m b u y in g a h o m e . M o s t p ro fe s s io n a ls in
t h e s e t t l e m e n t s e r v ic e b u s in e s s e s w ill g iv e
y o u g o o d s e rv ic e . N e v e r th e le s s , y o u m a y sa v e
y o u rs e lf m o n e y o r w o rry b y k e e p in g th e f o l­
lo w in g c o n s id e r a tio n s in m in d .
A.
Illegal Practices. P r a c t i c e s s p e c i f i c a l l y
p r o h ib ite d b y t h is A c t fa ll in to tw o c a te ­
g o rie s :
1.
Kickbacks. K i c k b a c k s a n d r e f e r r a l o f
b u s in e s s f o r g a in m o s t o f te n a r e tie d to ­
g e th e r , so t h e la w p r o h ib its a n y o n e f ro m g iv ­
in g o r ta k in g a fee , k ic k b a c k , o r a n y th in g o f
v a lu e u n d e r a n a g re e m e n t t h a t b u s in e s s r e ­
l a t e d to r e a l e s ta t e s e tt le m e n ts w ill b e r e ­
f e r r e d t o a s p e c ific p e r s o n o r o r g a n iz a tio n .
T h is re q u ir e m e n t d o e s n o t, o f c o u rse , p re ­
v e n t a g e n ts fo r le n d e r s a n d t it le c o m p a n ie s ,
a tto r n e y s , o r o th e r s a c tu a lly p e rfo rm in g a
se rv ic e in c o n n e c tio n w ith
th e m o rtg a g e
lo a n o r s e ttle m e n t tr a n s a c tio n s , fro m re c e iv ­
in g c o m p e n s a tio n fo r th e ir w o rk .
T h e p r o h ib itio n
is a im e d p r im a r ily
at
e lim in a tin g
th e
k in d
o f a rr a n g e m e n t in
w h ic h o n e p a r ty a g re e s to r e t u r n p a r t o f h is
fe e in o r d e r to o b ta in a v o lu m e o f b u s in e s s
f r o m t h e r e f e r r i n g p a r t y . T h e d a n g e r is t h a t
so m e s e ttle m e n t fe e s c a n b e in fla te d to c o v e r
th is a d d itio n a l p a rty , r e s u ltin g in a h ig h e r

FEDERAL REGISTER, VO L. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

22463

NOTICES
t o ta l c o s t to y o u . F o r e x a m p le , a t it le c o m ­
p a n y m ig h t p a y a fe e to a n o th e r p a rty fo r
b rin g in g i t t itle
in s u r a n c e b u s in e s s e v e n
th o u g h th e o th e r p a rty p e rfo rm s n o w o rk
a n d p ro v id e s n o se rv ic e in c o n n e c tio n w ith
is s u a n c e o f t h e t i t l e i n s u r a n c e p o lic y . A s
a n o t h e r e x a m p le , a la w y e r m i g h t g iv e a p a r t
o f h is fe e to a n o th e r p a r ty to t h e tr a n s a c tio n
i n e x c h a n g e f o r t h e r e f e r r a l o f b u s in e s s .
I t is a ls o ille g a l t o c h a r g e o r a c c e p t a fe e
o r p o r ti o n t h e r e o f o t h e r t h a n f o r s e rv ic e s
a c tu a lly p e rfo rm e d .
T h e r e a r e c r i m in a l p e n a l t i e s o f b o t h f in e
a n d im p r is o n m e n t f o r a n y v io la tio n o f th e s e
p r o v is io n s o f la w . T h e r e a r e a ls o p r o v is io n s
fo r y o u to re c o v e r th r e e tim e s th e a m o u n t o f
t h e fe e in v o lv e d o r a p o r ti o n th e r e o f . I n a n y
s u c c e s s fu l a c tio n to e n fo rc e y o u r r ig h t, th e
c o u r t m a y a w a rd y o u c o u r t c o s ts to g e th e r
w ith a fee fo r y o u r a tto rn e y .
2.
T itle Companies. A n o t h e r a b u s e p r o ­
h i b it e d b y la w is a n y r e q u i r e m e n t b y t h e
h o m e s e lle r t h a t t i t l e in s u r a n c e b e p u r c h a s e d
f r o m a p a r t i c u l a r c o m p a n y . U n d e r t h e la w ,
s e lle rs m a y n o t r e q u ir e , a s a c o n d itio n o f
s a le , t h a t t i t l e I n s u r a n c e b e p u r c h a s e d b y
th e b u y e r fro m a n y p a rtic u la r title co m p a n y .
A v io la tio n w o u ld m a k e t h e s e lle r lia b le to
y o u i n a n a m o u n t e q u a l t o t h r e e t im e s a ll
c h a rg e s m a d e fo r th e title in su ra n c e .
B.
Choices Open to the Buyer and Other
Points to Remem ber. B e c a u s e t h e v a r i o u s
p a rtie s to th e s e ttle m e n t tra n s a c tio n h a v e
d if f e r e n t in te r e s t s , t h e r e w ill b e m a n y s te p s
in t h e p r o c e s s o f b u y in g a h o m e w h ic h c a ll
fo r c a u tio n o n y o u r p a rt. A s a h o m e b u y e r,
y o u h a v e a n u m b e r o f c h o ic e s o p e n to y o u
c o n c e r n in g s e t t l e m e n t c o s ts a n d s e rv ic e s .
S o m e p o in ts to k e e p in m in d a r e :
1 . Understand The Role of th e Real E state
Broker. A l t h o u g h t h e r e a l e s t a t e a g e n t o r
b r o k e r u s u a ll y p r o v id e s h e lp f u l a d v ic e to
y o u o n m a n y a s p e c ts o f h o m e b u y in g a n d
m a y in so m e a re a s s u p e rv is e th e s e ttle m e n t,
h e n o r m a lly s e rv e s a s a g e n t o f t h e s e lle r.
W h ile t h e r e a l e s t a t e l ic e n s in g la w s o f m o s t
S ta te s re q u ir e t h a t th e b ro k e r t r e a t b o th
b u y e r a n d s e lle r f a ir ly , y o u s h o u ld n o t e x ­
p e c t th e b ro k e r to r e p re s e n t y o u r in te re s ts
t o t h e e x c lu s io n o f th o s e o f t h e s e lle r.
T h e b r o k e r ’s b a s i c o b j e c t i v e s a r e t o o b t a i n
a s ig n e d c o n tr a c t o f s a le w h ic h p r o p e r ly e x ­
p re s s e s th e a g re e m e n t o f th e p a rtie s a n d to
c o m p le te t h e s a le a n d e a r n a c o m m is s io n o r
fe e . B e f o re y o u s ig n , m a k e s u r e t h a t t h e s a le s
c o n tr a c t c o rre c tly e x p re s s e s y o u r a g re e m e n t
w ith t h e s e lle r o n s u c h i m p o r t a n t d e ta ils a s
m e th o d o f p a y in g t h e s a le s p r ic e o f t h e h o m e ,
th e tim e s e t fo r y o u r m o v e -in , a n d th e s ta tu s
o f f ix tu re s a n d o th e r p e rs o n a l p r o p e r ty in th e
hom e.
A b ro k er m ay rec o m m e n d th a t y o u deal
w ith a p a rtic u la r le n d e r, title c o m p a n y , a t ­
to rn e y , o r p r o v id e r o f s e tt le m e n t s e rv ic e s .
A lth o u g h th is r e c o m m e n d a tio n m a y b e b a s e d
o n t h e b r o k e r ’s u p - t o - d a t e k n o w l e d g e o f
r a t e s a n d q u a li t y o f s e rv ic e , y o u s h o u ld fe e l
c o m p le te ly f re e to c o n s id e r a lte r n a tiv e s , c o m ­
p a re r a te s a n d fee s, a n d m a k e y o u r o w n
d e c is io n o n th e s e m a t t e r s .
I t is u p t o y o u t o r e v ie w t h e d o c u m e n t s
c a re f u lly . A lth o u g h t h e b r o k e r m a y o ffe r
h e lp f u l a d v ic e , k e e p i n m in d t h a t y o u a re
t h e o n e w h o is s p e n d in g t h e m o n e y t o b u y
a h o m e a n d a re e n title d to a fu ll u n d e r s ta n d ­
i n g o f t h e c o s t s . T h e b r o k e r ’s p r i n c i p a l i n ­
t e r e s t a t s e t t l e m e n t is t o g e t t h e t r a n s a c t i o n
c lo s e d a n d h i s f e e o r c o m m is s io n d is b u r s e d .
2 . S ettlem en t attorneys, escrow and closing
agents. I n s o m e p a r t s o f t h e c o u n t r y , s e t t l e ­
m e n ts a re o f te n c o n d u c te d b y a tto r n e y s w h o
s p e c ia liz e in r e a l e s ta t e tr a n s a c t i o n s . I n o t h e r
p a r ts o f th e c o u n try , th e s e ttle m e n t m a y b e
c o n d u c te d b y a n e s c ro w o r c lo s in g a g e n t o r
b y th e le n d e r o r b ro k e r. T h e ir p rim a ry c o n ­
c e r n is o r d e r l y c o m p l e ti o n o f a ll t h e d e t a i l s
c a lle d f o r i n t h e s a le s c o n tr a c t a n d i n t h e
m o rtg a g e c o m m itm e n t.




B e c a u s e m o rtg a g e le n d e rs , u n lik e b o rro w ­
e rs, go th r o u g h s e ttle m e n t o fte n , th e y o f te n
w ill n o t b e p r e s e n t a t t h e s e t t le m e n t, p r e ­
f e r r in g t o s p e ll o u t in d e ta i l in a l e t t e r o f
in s tr u c tio n to th e p e rs o n c o n d u c tin g th e
c lo s in g t h a t w h ic h t h e y e x p e c t t o b e d o n e
b e fo re lo a n f u n d s c a n b e re le a se d .
Y o u , t h e b u y e r, w ill n o t h a v e a le tte r o f
i n s t r u c t i o n s . Y o u w ill b e a s k e d a t s e t t l e m e n t
to m a k e a n u m b e r o f d e c is io n s i n a re a s w ith
w h ic h y o u m a y h a v e h a d little p re v io u s e x ­
p e rie n c e .
B e fo re s e ttle m e n t, y o u s h o u ld
ask th e
b ro k e r, th e s e ttle m e n t a tto rn e y , o r a n a tto r ­
n e y r e t a in e d b y y o u w h a t q u e s tio n s w ill p r o b ­
a b ly c o m e u p . W rite th e m d o w n so t h a t y o u
m a y h a v e tim e to t h in k a b o u t d e c is io n s t h a t
a re im p o rta n t to y o u .
S e ttle m e n t a tto r n e y s d o n o t m in d a n s w e r­
in g y o u r q u e s ti o n s — t h a t is a p a r t o f t h e i r
jo b — b u t a t t h e s a m e t im e t h e y m a y n o t i n ­
v ite q u e s tio n s . I f y o u h a v e d o u b ts , a s k q u e s ­
t i o n s . D o n ’t l e t a n y o n e r u s h y o u . T h e r e a r e
lik e ly to b e le n g th y d o c u m e n ts t o s ig n a t s e t ­
tle m e n t. I f y o u o r y o u r a tto r n e y a sk s, y o u
c a n u s u a ll y g e t c o p ie s o f t h e f o r m s i n a d ­
vance.
3 . Legal representation. I f y o u f e e l u n f a ­
m ilia r o r u n s u re w ith re a l e s ta te s e ttle m e n ts ,
a n d m a n y p e o p le d o , c o n s id e r h i r i n g y o u r o w n
a tto r n e y to r e p re s e n t y o u . I f y o u h ire a n a t ­
to r n e y , b e c e r t a i n t h a t t h e r e is a c le a r u n d e r ­
s ta n d in g in a d v a n c e a b o u t w h a t s e rv ic e s h e
is t o p e r f o r m a n d w h a t h i s f e e w ill b e f o r
th o s e s e rv ic e s . S o m e w ill q u o t e a f la t fee ,
o th e r s a n h o u r ly r a te o r o n e b a s e d o n a p e r ­
c e n ta g e o f t h e s a le s p ric e . T h e I m p o r ta n t
p o in t is t h a t y o u s h o u ld k n o w in a d v a n c e
h o w m u c h y o u s h o u ld e x p e c t to p a y f o r h is
se rv ic e s . I f y o u d o n o t k n o w a n a tto r n e y w h o
is w e ll v e r s e d i n r e a l e s t a t e t r a n s a c t i o n s ,
m a n y lo c a l b a r a s s o c ia tio n s m a y b e a b le to
r e f e r y o u t o o n e w h o is .
4 . Discuss w ith lenders th eir requirem ents
for settlem en t services. T h e l e n d e r ’s l e g i t i ­
m a t e b u s in e s s i n t e r e s t is i n m a k in g a l o a n o n
t e r m s w h ic h w ill p r o v id e a g o o d y ie ld w ith
l i t t l e r is k . I n s e le c tin g a le n d i n g i n s t i t u t i o n ,
a sk a b o u t re q u ir e m e n ts fo r p ro p e rty su rv e y s,
a p p ra is a ls , e scro w s fo r ta x e s a n d in s u ra n c e ,
a n d o t h e r s e tt le m e n t s e rv ic e s . Y o u m a y c o m ­
p a re th e s e re q u ire m e n ts w ith th o s e o f o th e r
le n d e rs .
S o m e le n d e r s w ill g iv e y o u t h e d is c r e tio n
to s h o p a m o n g d iff e re n t p ro v id e r s o f s e tt le ­
m e n t s e rv ic e s . B u t, m o s t le n d e rs d e a l r e g u ­
la rly w ith c e r ta in t it le c o m p a n ie s, a tto r n e y s ,
a p p ra is e rs , s u rv e y o rs o r o th e r s in w h o m th e y
h a v e c o n fid e n c e , a n d u s u a lly w a n t t o a r r a n g e
fo r
p r o v is io n
of
a ll
s e ttle m e n t
s e rv ic e s
th r o u g h th e s e p a r tie s a s a c o n v e n ie n c e to th e
b u y e r a n d le n d e r. I f y o u w is h to b a rg a in d i ­
r e c tly t o r e d u c e r a t e s fo r s e tt le m e n t s e rv ic e s ,
d isc u s s t h is w ith v a rio u s le n d e rs .
R e m e m b e r to c o m p a re a ls o t h e m o rtg a g e
in te re s t ra te s
and
o th e r m o rtg a g e te rm s
q u o te d b y d iff e re n t le n d e rs . A le n d e r m a y
g a in th r o u g h h ig h e r m o rtg a g e in te r e s t o v e r
t h e r e p a y m e n t t e r m w h a t i t g iv e s u p a t t h e
“ f r o n t e n d ” in re d u c in g r e q u ir e m e n ts fo r
lo a n o r g in a tio n fee s, d is c o u n t p o in ts a n d
o th e r o n e -tim e c h a rg e s w h ic h m u s t b e p a id
in c a s h a t s e ttle m e n t. O th e r fe a tu re s o f
a v a ila b le lo a n s s h o u ld a ls o b e c o m p a r e d a s
y o u shop.
F e e l fre e to s e le c t a le n d e r o th e r t h a n th e
o n e r e c o m m e n d e d b y t h e b r o k e r o r s e lle r. I t
is e n tir e ly p o s s ib le t h a t y o u m a y f in d f in a n c ­
in g w h ic h is m o re a d v a n ta g e o u s t o y o u .
5 . T itle insurance required by th e lender

protects the lenders. You m ay buy a separate
owner's title insurance policy for your own
protection. T i t l e i n s u r a n c e i s o f t e n r e q u i r e d
t o p r o t e c t t h e l e n d e r a g a i n s t lo s s i f a fla w
in t i t l e is n o t f o u n d b y t h e t i t l e s e a r c h m a d e
w h e n a h o m e i s p u r c h a s e d . T h e l e n d e r ’s t i t l e
in s u r a n c e p o lic y w ill b e p a id f o r b y y o u o r b y
th e s e lle r a c c o rd in g to lo c a l c u s to m o r th e
s a le s c o n tr a c t.

Y o u a n d t h e le n d e r h a v e d iffe re n t i n te r ­
e s ts in t h e p r o p e r ty y o u a re b u y in g , a n d
th e r e a re m a n y k in d s o f tit le d e fe c ts t h a t
c a n tr o u b le y o u w i t h o u t c re a tin g p ro b le m s
fo r th e le n d e r. Y o u m a y b u y a s e p a r a te
o w n e r ’s t i t l e i n s u r a n c e p o l i c y f o r y o u r o w n
p r o te c ti o n i n a r e a s w h e r e t h i s p o lic y is n o t
f u r n is h e d b y t h e s e lle r a s a m a t t e r o f c u s ­
to m .
6.
Try to m in im ize th e perform ance and

cost of re p e titiv e or excessive se ttle m e n t re­
quirem ents. S o m e s e t t l e m e n t c o s t s a r e
b e y o n d y o u r c o n tro l, s u c h a s g o v e rn m e n t
tr a n s f e r c h a rg e s . O th e r ite m s m a y b e n e g o ­
tia b le , h o w e v e r, s u c h
a s c e r ta in s e rv ic e s
w h ic h th e le n d e r re q u ire s b u t w h ic h y o u p a y
fo r.
a . T itle search. T h e r e m a y b e n o n e e d f o r
a f u ll h is to r ic a l t it le s e a r c h “b a c k to th e
y e a r o n e ” e a c h tim e t i t l e to a h o m e is t r a n s ­
fe rre d . I f y o u a re b u y in g a h o m e w h ic h h a d
re c e n tly c h a n g e d h a n d s , in q u ir e a t t it le c o m ­
p a n ie s a b o u t a “ r e is s u e r a t e . ” I f t h e p o lic y o f
t h e p re v io u s o w n e r is a v a ila b le , t a k e i t to a
t it le in s u r e r b e fo re s e ttle m e n t. I t m a y h e lp
y o u o b ta in a “ r e is s u e r a t e .” G e n e ra lly th is
r a te , w h e n p e r m itte d b y S ta te la w o r r e g u ­
l a t i o n s , a llo w s a r e d u c t i o n
o f th e
u sual
c h a r g e f o r a n e w p o lic y i f t h e p r e v io u s p o lic y
w a s is s u e d b y th e s a m e t it le in s u r e r o r b y
a n o th e r re p u ta b le c o m p a n y w ith in a re c e n t
p e rio d .
T itle s e a r c h r e q u ir e m e n ts a re s o m e tim e s
s e t b y a g e n c ie s w h ic h in s u r e o r g u a ra n te e th e
lo a n , o r b y In v e s to rs w h o p u r c h a s e m o rtg a g e s
o rig in a te d b y o th e r le n d in g in s titu tio n s . T h e
le n d e r y o u d e a l w ith m a y n o t h a v e d is c re ­
tio n
on
e lim in a tin g
or
re d u c in g
th e s e
re q u ire m e n ts .
b . Survey. T h e s u r v e y o f t h e p r o p e r t y m a y
b e s im p lifie d a n d t h e c o s t r e d u c e d if a f u ll
p ro fe s s io n a l s u rv e y w a s p e rf o r m e d re c e n tly .
A n ew su rv e y m a y n o t b e n e e d e d to sh o w th a t
n o r e c e n t c h a n g e s h a v e o c c u rre d w h ic h a f ­
f e c t th e v a lid ity o f th e la s t s u rv e y . A s u r ­
v e y o r m a y b e a b le t o a v o id t h e c o s t o f a
r e p e titiv e c o m p le te s u rv e y o f t h e p r o p e r ty if
h e h a s ac ce ss to a re c e n t s u rv e y w h ic h h e
c a n “ u p d a te .” H e re a g a in , t h e r e q u ir e m e n ts
o f in v e s to rs w h o b u y lo a n s o r ig in a te d b y y o u r
l e n d e r m a y l i m i t t h e l e n d e r ’s d i s c r e t i o n t o
n e g o tia te th is p o in t.
c . S e ttle m e n t agent. S e t t l e m e n t p r a c t i c e s
v a ry f ro m lo c a lity to lo c a lity , a n d e v e n w ith in
t h e s a m e c o u n ty o r c ity . I n v a rio u s a r e a s s e t ­
tle m e n ts a re c o n d u c te d b y t h e le n d in g i n ­
s titu tio n s , t i t l e in s u r a n c e c o m p a n ie s , e sc ro w
c o m p a n ie s , r e a l e s ta te b ro k e rs , a n d a tto r n e y s
f o r t h e b u y e r o r s e lle r. B y i n v e s t ig a t in g a n d
c o m p a r in g p r a c tic e s a n d r a te s , y o u m a y f in d
t h a t th e f ir s t s u g g e s te d s e ttle m e n t a g e n t m a y
n o t b e t h e le a s t e x p e n siv e . Y o u m ig h t sa v e
m o n e y b y ta k in g th e in itia tiv e in a rr a n g in g
f o r s e tt le m e n t a n d s e le c tin g t h e f irm a n d lo ­
c a tio n w h ic h b e s t m e e ts y o u r n e e d s.
d . Escrows. T h e R e a l E s t a t e S e t t l e m e n t P r o ­
c e d u re s A c t o f 1974 h a s p la c e d lim its o n th e
a m o u n t o f m o n e y w h ic h th e le n d e r c a n r e ­
q u ire y o u to p la c e in e scro w a t s e ttle m e n t fo r
la te r
paym ent
of
p ro p e rty
ta x e s
and
in su ra n c e .
K n o w y o u r r ig h ts u n d e r t h i s n e w S e c tio n
10 p r o v is io n o f t h e A c t, a s e x p la in e d i n t h e
n e x t C h a p te r.
ESCROW ACCOUNTS
I te m 23 o n t h e e n c lo s e d s a m p le s e tt le m e n t
s ta te m e n t fo rm c o v e rs p a y m e n ts y o u r le n d e r
m a y r e q u i r e y o u t o m a k e t o a n “ e s c r o w ,”
“ re s e r v e ,” o r “ im p o u n d ” a c c o u n t f o r i n s u r ­
a n c e p re m iu m s , re a l e s ta te ta x e s , a n d u n p a id
a s se s s m e n ts .
M a n y le n d e rs re q u ir e t h a t e a c h m o n th ly
p a y m e n t o n t h e m o rtg a g e in c lu d e a m o u n ts
fo r ta x e s , a n d h a z a r d in s u r a n c e . W h e n a p ­
p lic a b le , le n d e r s w ill a ls o c o lle c t m o rtg a g e
in s u r a n c e p r e m iu m s a n d a s s e s s m e n ts p a y a b le
t o h o m e o w n e r a n d o t h e r a s s o c i a ti o n s a s w e ll
a s to
s p e c ia l a s s e s s m e n t d is tr ic ts . T h e s e

FEDERAL REGISTER, VOL. 4 0 , NO. 100— THURSDAY, M AY 2 2 , 1975

NOTiCES

22464
f u n d s a r e s e t a s id e e a c h m o n th in e s c ro w
a c c o u n ts a n d a re a c c u m u la te d to p a y th e
ta x e s a n d o t h e r b ills w h e n th e y a r e d u e .
B y la w , t h e a m o u n t y o u p a y i n t o a n e s ­
c ro w a t s e ttle m e n t m a y n o t e x c e e d y o u r
s h a r e o f ta x e s a n d in s u r a n c e a c c r u e d p r io r to
s e ttle m e n t,
p lu s
i/b th
of
th e
e s tim a te d
a m o u n t w h ic h w ill c o m e d u e f o r ta x e s a n d
in s u r a n c e in t h e 1 2 - m o n th p e rio d b e g in n in g
a t s e ttle m e n t. I f ta x e s o r in s u r a n c e c o s ts g o
u p p e rio d ic a lly o v e r t h e life o f y o u r m o r t­
g a g e , t h e l e n d e r w ill n e e d t o c o lle c t m o re
m o n e y f o r th e e sc ro w a c c o u n ts to c o v e r th e s e
in c r e a s e d c o s ts , r e s u l ti n g i n a la r g e r m o n th l y
h o u s in g p a y m e n t f o r y o u . S h o u ld t h e s e c o s ts
d e c lin e p e rio d ic a lly , t h e le n d e r s h o u ld r e d u c e
t h e m o n th l y e s c ro w c o lle c tio n a c c o rd in g ly .
T h e e s c ro w s e rv ic e p ro v id e d b y y o u r le n d e r
is d e s ig n e d t o m e e t o n g o in g e x p e n s e s o f
h o m e o w n e rs h ip . B y s p re a d in g p a y m e n ts o v er
t h e y e a r i t e li m in a te s t h e p r o s p e c t o f b e in g
f a c e d w ith la r g e a n n u a l b ills , p e rh a p s a t a n
i n o p p o r tu n e tim e . O n t h e o th e r h a n d , y o u
m ay w a n t to m a n a g e y o u r o w n p a y m e n t of
ta x e s a n d / o r in s u r a n c e , in s te a d o f p a y in g
in to a n e s c ro w h e ld b y t h e le n d e r. D is c u ss
t h is p o in t w h e n s h o p p in g a m o n g le n d e rs . B e
a w a re , h o w e v e r, t h a t c e rta in e scro w a c c o u n ts
a re r e q u ir e d b y F e d e ra l r e g u la tio n , a n d in
s o m e S t a te s b y la w s a ffe c tin g S ta te - c h a r te r e d
s a v in g s a n d lo a n a s s o c ia tio n s .
P R E V IO U S S E L L IN G P R I C E D IS C L O S U R E

T h e l e n d e r is r e q u i r e d b y la w b e fo r e m a k ­
in g a c o m m itm e n t to f in a n c e a m o rtg a g e o n
a h o u s e , w h i c h w a s c o m p l e t e d m o r e t h a n 12
m o n th s p r io r to s e ttle m e n t, to c o n firm t h a t
t h e s e lle r o r h is a g e n t h a s d isc lo s e d in w r it­
in g t o t h e b u y e r t h e f o llo w in g i n f o r m a t io n :




(1 ) T h e n a m e a n d a d d re s s o f th e p r e s e n t
o w n e r:
(2 ) T h e d a te
th e p re se n t o w
tio n
need be
a c q u ir e d m o re
and

th e p r o p e r ty w a s a c q u ir e d b y
n e r ( th e y e a r o n ly o f a c q u is i­
g iv e n if th e p r o p e r ty w a s
t h a n tw o y e a rs p re v io u s ly ) ;

(3 ) I f t h e s e lle r h a s n o t o w n e d t h e p r o p ­
e rty fo r a t le a s t tw o y e a rs p r io r to th e d a te
o f y o u r lo a n a p p lic a tio n a n d h a s n o t u se d
th e p r o p e r ty a s a p la c e o f re s id e n c e , th e d a te
a n d p u r c h a s e p r i c e o f t h e l a s t “ a r m ’s l e n g t h
tr a n s f e r ” o f th e p ro p e rty , a lis t o f s u b s e q u e n t
im p ro v e m e n ts o th e r th a n m a in te n a n c e , a n d
th e c o s t o f th e im p ro v e m e n ts.
T h e p u r p o s e o f t h i s r e q u ir e m e n t is to i n ­
f o r m y o u w h e t h e r t h e h o u s e is b e in g s o ld b y
a n o w n e r-o cc u p a n t o r b y so m eo n e w ho h as
a c q u ire d th e h o u s e a n d p r e p a r e d i t fo r r e ­
s a le . M a n y i n v e s to r s m a k e a liv e lih o o d b y
in v e s tin g in e x is tin g h o u s in g , m a k in g r e ­
p a ir s a n d im p r o v e m e n ts , a n d re s e llin g a t a
f a ir p ro fit. H o w e v e r, a b u s e s h a v e o c c u rre d
in w h ic h o n ly s u p e rfic ia l r e p a irs h a v e b e e n
m a d e a n d h o m e s h a v e b e e n s o ld a t p r ic e s
g r e a tly i n e x c e s s o f t h e i r v a lu e s . A s a b u y e r,
y o u r k n o w le d g e o f th e p re v io u s s e llin g p ric e
m a y h e lp y o u d e te r m in e t h e p r e s e n t v a lu e
o f th e p ro p e rty .
T h e l e n d e r ’s o b l i g a t i o n i s c o n s i d e r e d m e t
if h e re c e iv e s a c o p y o f th e w r itte n s ta t e ­
m e n t f r o m t h e s e lle r t o y o u g iv in g t h e i n ­
f o r m a tio n d e s c r ib e d a b o v e . A t t h a t tim e ,
th e le n d e r m a y m a k e th e m o rtg a g e lo a n
c o m m itm e n t.
T o b a c k u p y o u r r ig h t to f u ll d is c lo s u re
c o n c e rn in g e x is tin g p r o p e rty , a n y p e rs o n (o r
p e r s o n s ) w h o k n o w in g ly a n d w illin g ly p r o ­

v id e s f a ls e in f o r m a tio n o r f a ils to c o m p ly
w ith d isc lo s u re r e q u ir e m e n ts m a y b e s u b je c t
t o c r im in a l p e n a ltie s o f f in e a n d i m p r is o n ­
m e n t, a n d c iv il d a m a g e s .
JU R IS D IC T IO N O F C O U R TS

I f y o u h a v e s u ffe re d d a m a g e s t h r o u g h v io ­
la tio n s o f th e R e a l E s ta te S e ttle m e n t P ro c e ­
d u r e s A c t o f 1974 a s d e s c rib e d in th e p re c e d ­
in g p a g e s, a c tio n m a y b e b r o u g h t in th e
U n ite d S ta te s D is tr ic t C o u rt fo r th e d is tr ic t
i n w h ic h t h e p r o p e r ty in v o lv e d is lo c a te d , o r
in a n y o th e r c o u r t o f c o m p e te n t ju ris d ic tio n ,
w ith in o n e y e a r fro m th e d a te o f th e o c ­
c u r r e n c e o f t h e v i o la tio n . Y o u m a y a ls o h a v e
r i g h t s u n d e r o t h e r F e d e r a l o r S t a t e la w s .
TRUTH IN

L E N D IN G D IS C L O S U R E

A t t h e t im e o f a d v a n c e d is c lo s u r e , y o u w ill
re c e iv e a T r u th in L e n d in g s ta t e m e n t a s p a r t
o f th e s ta n d a r d s e ttle m e n t c o s t d isc lo s u re
fo rm . T h is T r u th in L e n d in g in fo r m a tio n
w ill a ls o a p p e a r o n t h e s ta n d a r d s e tt le m e n t
s ta te m e n t g iv e n t o y o u u p o n c o m p le tio n o f
th e s e ttle m e n t. T h e T r u th in L e n d in g s ta te ­
m e n t d isc lo s e s t h e A n n u a l P e r c e n ta g e R a te
( “ A P R ” ) w h ic h y o u w ill p a y o n y o u r m o r t ­
g a g e lo a n . T h is r a te m a y b e h ig h e r t h a n th e
c o n tra c t in te re s t r a te q u o te d o n y o u r m o rt­
g a g e . T h i s is b e c a u s e t h e c o n t r a c t r a t e i n ­
c lu d e s o n ly in te r e s t, b u t t h e A P R e x p re s s e s
th e t o ta l fin a n c e c h a rg e in c lu d in g c e r ta in
c r e d i t c o s ts b e s id e s i n t e r e s t o n t h e lo a n .
T h e T r u t h i n L e n d in g s t a t e m e n t w ill a ls o
d isc lo s e a n y a d d itio n a l c h a rg e s f o r “ p r e p a y ­
m e n t ” s h o u ld y o u p a y o ff t h e b a la n c e o f t h e
m o r tg a g e i n f u l l b e f o r e i t is d u e .
[ F R D o c . 7 5 —1 3 2 6 1 F i l e d 5 - 1 9 - 7 5 ; 8 : 4 5 a m ]

FEDERAL REGISTER, VOL. 40, NO. 100— THURSDAY, M A Y 2 2 , 1975




Just Released

CODE OF FEDERAL REGULATIONS
(Revised as of November 1, 1974)
T itle 49— T ransportation (P a rts 1200-1299)------------------- $7.55

[ 4 Cumulative checklist of CFR issuances for 1975 appears in the first issue
of the Federal Register each month under Title 1 ]

Order from Superintendent of Documents,
United States Government Printing Office,
W ashington, D.C.

20402