Compliance Checklists

Transcription

1 Compliance Checklists Lender Checklist... Ck-1 Broker Checklist... Ck-7 Servicer Checklist... Ck-13 Checklist for Other Service Providers... Ck-15 Ck-i

2 Ck-ii THE RESPA MANUAL

3 Ck-1 Compliance Checklists This chapter includes several checklists to help your organization audit itself for compliance with RESPA. Lender Checklist 1. Compilation of Documents a. Obtain samples of the following documents: i. Special Information Booklet. Checklist 1: Lender Checklist ii. For open-end plans, Federal Reserve Board brochure When Your Home is On the Line: What You Should Know About Home Equity Lines of Credit. iii. Good Faith Estimate (GFE). iv. Application Servicing Transfer Disclosure. v. HUD-1 Settlement Statement. vi. HUD-1A Settlement Statement, if used. vii. Initial Escrow Statement. viii. Affiliated Business Arrangement (AfBA) Disclosure, if appropriate. ix. Closing Escrow Disclosure. x. Annual Escrow Account Statement. xi. Notice of Servicing Transfer, if appropriate. 2. Types of Loans a. What types of loans do you make subject to RESPA? i. Purchase money mortgage loans. ii. Refinancings. iii. Mortgage loans secured by subordinate liens. iv. Open-end home equity lines of credit. v. Reverse mortgage loans. 3. Special Information Booklets a. Are Special Information Booklets provided to at least one applicant at application? [These are not required for refinances, subordinate liens and reverse mortgage loans; not required if loan is declined or withdrawn within three business days after receipt of application.] b. Do the booklets match the prescribed form? i. If not, are the differences permitted changes or have they been specifically approved by the CFPB? c. For brokered loans, did the broker provide or does broker have a process in place to provide the booklet? i. If the broker did not provide or has no process in place to provide the booklet, have you reminded the broker of this requirement? d. For open-end home equity lines of credit, do applicants receive the Federal Reserve booklet When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit [optional in place of Special Information Booklet]? 4. Good Faith Estimates (GFEs) a. Are Good Faith Estimates complete and accurate, using the prescribed uniform form (effective January 1, 2010)? [GFEs are not required for open-end lines of credit if Truth-in-Lending (TIL) disclosures are made; GFEs are not required for a loan declined or withdrawn within three business days after receipt of the application.]

4 THE RESPA MANUAL Ck-2 Checklist 1: Lender Checklist b. Do the forms match the Regulation X prescribed form (effective January 1, 2010)? c. Are GFEs provided to at least one applicant within three business days after application? d. Does each GFE properly estimate each fee that appears on the HUD-1 for the same transaction? i. If fees were not properly estimated, have you reviewed the fees actually charged, and updated your GFE disclosure process? e. For brokered loans, who provided the GFE? i. If the broker provided the GFE, did the broker provide the GFE within three business days after receiving the application? ii. If only a broker s GFE is in file, was it accurate and complete when provided? A. If it was not accurate and complete, did you provide your own GFE within the applicable three-day period? iii. If both you and the broker provided GFEs, do the GFEs match for each transaction? A. If the GFEs do not match, have you resolved the differences and made any necessary changes or discussed changes with the broker? iv. Were direct and indirect broker fees disclosed as appropriate? v. Were the official instructions for completing GFEs followed? f. For dealer loans, who provided the GFE? i. If the dealer provided the GFE, did the dealer provide the GFE within three business days after receiving the application? ii. Were the official instructions for completing GFEs followed? iii. If only the dealer s GFE is in file, was it accurate and complete when provided? A. If it was not accurate and complete, did you provide your own GFE within the applicable three-day period? iv. If both you and dealer provided GFEs, do the GFEs match for each transaction? A. If the GFEs do not match, have you resolved the differences and made any necessary changes or discussed changes with the dealer? 5. Prequalification Programs a. Do you offer any prequalification programs, including computer-assisted application-taking programs that prequalify inquirers? i. If yes, are Special Information Booklets and Good Faith Estimates given at the appropriate time? 6. HUD-1 and HUD-1A Settlement Statements a. Are HUD-1s or HUD-1As complete and accurate? i. Do the forms match the prescribed forms? A. If not, are the differences permitted changes or have they been specifically approved by the CFPB? b. Does the HUD-1 or HUD-1A information match the estimates given on the GFE for the same transaction? i. If fees were not properly estimated, have you reviewed the fees actually charged and updated your GFE disclosure process? c. Do other closing disbursement statements and receipts contained in file, along with your schedule of fees imposed, confirm the accuracy of the HUD-1 or HUD-1A information? d. Are all fees appropriately included and marked P.O.C. as required? e. Were HUD-1 or HUD-1A instructions followed?

5 Ck-3 Compliance Checklists Checklist 1: Lender Checklist f. Do you make the HUD-1 or HUD-1A available one day before settlement at the borrower s request? g. Were the HUD-1 or HUD-1A forms delivered to at least one borrower as required? h. If a broker was involved in a transaction, were direct and indirect broker fees disclosed as appropriate? 7. Affiliated Business Arrangements a. Are you involved in any affiliated business arrangements? i. If yes, do you give AfBA disclosures? ii. Is the AfBA disclosure given at the time of or before a referral, or within three business days after a referral made by telephone? [Exceptions: A lender may provide the disclosure with the GFE. A lawyer or law firm requiring the use of a particular title insurance agent must provide the disclosures when the client engages the attorney or law firm.] iii. Do you have a process in place to ensure AfBA disclosures are provided when appropriate? iv. Are the disclosures in proper form? A. Does the form state use of the settlement service provider is not required? [Exceptions: A lender may require the use of a particular attorney, credit bureau, or appraiser. An attorney may require the use of a title insurance agency operated adjunct to his or her law practice, except when a seller requires use of the attorney.] B. Does the form describe the nature of the relationship with the provider? C. Does the form give the estimated charge or range of charges made by the provider? D. Does the form include the required text from Regulation X? v. Is use of the provider in fact not required? [Exceptions: A lender may require the use of a particular attorney, credit bureau or appraiser. A lawyer or law firm may require the use of an adjunct title insurance agency, except when a seller requires use of the lawyer or law firm.] vi. Does the lender receive only a return on ownership or franchise interest or other payment permitted by RESPA? b. Is each affiliated business a bona fide provider of settlement services, rather than a sham arrangement? 8. Computer Loan Origination Systems a. Do you charge a CLO Access Fee? i. If yes, is it reasonable compensation for services rendered? 9. Servicing Transfers a. Application Servicing Transfer Disclosures i. Do you give Application Servicing Transfer Disclosures? [These disclosures are not required for subordinate lien loans or open-end lines of credit.] A. Do you give them at application, for face-to-face interviews? B. Do you give them or mail them within three business days after application, if there is no face-to-face interview? I. If an application shows different addresses for the applicants, do you send a copy to each address? C. Do your forms compare to the model forms? [The exact language is not required, except for the form of acknowledgment.] D. Is each Application Servicing Transfer Disclosure accurate? b. Notices of Servicing Transfer

6 THE RESPA MANUAL Ck-4 Checklist 1: Lender Checklist i. Did you provide Notices of Servicing Transfer not more than 15 calendar days after the date of transfer when you were the transferee servicer; not less than 15 calendar days before transfer when you were the transferor servicer? [These are not required for subordinate lien loans or open-end lines of credit.] A. Do your forms match the model forms? [You may only make minor modifications to meet your particular circumstances.] c. Servicing Transfer Procedures i. Do you not impose late fees or treat payments as late within 60 calendar days of a servicing transfer, if the old servicer receives payment on or before the due date (including any grace period)? ii. Do you follow the required servicing inquiry procedures? A. Do you acknowledge receipt of qualified written requests within 20 business days? B. Do you resolve each request within 60 business days? C. Do you not report adverse information regarding any payment subject to a qualified written request, during the 60 business days following its receipt? iii. If you were a transferee servicer, did you provide an initial escrow account statement within 60 calendar days after the date of transfer if you changed either the monthly payment amount or the accounting method? iv. If you transferred servicing, did you provide short-year statements to the borrowers within 60 calendar days of the date of transfer? 10. Escrow Accounts i. Do you require or maintain escrow accounts? a. General Procedural Requirements i. Before establishing each escrow account, do you conduct an escrow account analysis to determine the amount the borrower must deposit into the account, within the limitations of Sec (c)? ii. For each account, have you reviewed the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. For each account, do you conduct an escrow analysis at the end of each escrow account computation year? b. Initial Escrow Account Statements i. Do you provide an initial escrow account statement at closing or not later than 45 calendar days after an escrow account is established? A. Does each initial escrow account statement include: I. monthly mortgage and escrow payments? II. III. IV. estimated taxes, estimated insurance premiums, and other disbursements to be made in the first year after the account is established? any cushion amount? a trial running balance? ii. Do you provide the initial escrow account statement substantially in the format prescribed by Appendix G of Regulation X? c. Annual Escrow Account Statements i. Do you provide annual escrow account statements not less than once each 12-month period and not more than 30 calendar days after the end of each 12-month period? A. Does each annual escrow account statement include:

7 Ck-5 Compliance Checklists Checklist 1: Lender Checklist I. the amount of current monthly mortgage and escrow payments? II. III. IV. the amount of the past year s monthly mortgage and escrow payments? the total amount paid into escrow during the past year? the total amount paid out of escrow during the past year for taxes, insurance, and other charges? V. the balance in escrow at end of the period? VI. d. Escrow Procedures an explanation of how any surplus is being handled? VII. an explanation of how any shortage or deficiency is to be paid by the borrower? VIII. an explanation of why the estimated low monthly balance was not reached, if applicable? i. Have you implemented aggregate analysis escrow accounting for post-rule accounts, effective May 24, 1995, in accordance with Section (c) and (d)? ii. For each account, have you reviewed the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. When an escrow account analysis shows a surplus of $50 or more and the borrower is current, do you refund the surplus within 30 calendar days? iv. Do you notify a borrower at least once during any computation year in which there is a shortage or deficiency in the escrow account? v. Do you provide short-year statements to borrowers who pay off, within 60 calendar days of the pay-off? vi. Do you make timely payments of all items disbursed from the escrow account (for current borrowers)? 11. Section 8 Prohibitions of Kickbacks and Unearned Fees a. Have you reviewed your policies and practices regarding the entertainment of referral sources and settlement service providers? i. Do you provide any meals or entertainment in connection with educational presentations about your products, programs and offerings? A. If meals and entertainment are not related to educational presentations, do you offer them to a variety of participants regardless of whether they have referred or may refer business to you? b. Do you offer promotional items to actual or potential sources of referrals? i. If so, do the items have only nominal value? A. If so, do you not give them in return for a referral? c. Have you reviewed all disbursements made and compensation received in connection with federally related mortgage loans? i. Have you taken seriously and investigated any suggestions that payments may have been made in return for referrals? ii. Do you pay fees, give gifts, or offer other things of value to outside parties? A. What services are rendered in return? B. Is each payment reasonable for the services rendered? d. Do you pay fees or other things of value to employees for referring business to your affiliates? e. Do you receive fees or other things of value from third parties? i. What services do you render?

8 THE RESPA MANUAL Ck-6 Checklist 1: Lender Checklist ii. Are the fees reasonable for the services rendered? iii. Do you pay more or less than fair market rental value for any leased office space or equipment? f. From whom do you receive referrals? i. What compensation or other things of value, if any, do you pay to the referrors? In each case, is the compensation reasonable for services actually rendered? ii. Do you charge more or less than fair market rental value for any leased office space or equipment? g. Have you reviewed the following situations for possible Section 8 issues: i. All offers of prizes? ii. Any discounted rental payments or other fees you are charged for services rendered or goods furnished? iii. Any free or discounted goods or services you offer? iv. All promotional items you give away? v. All equipment you furnish or receive at discounted or free rental rates? vi. Any percentage-based fees? vii. Any fees you pay for application-taking or processing services? viii. Any special arrangements you make with certain referrors and not with others, particularly if the beneficiaries are persons who make substantial referrals? ix. Any multiple payments made to the same settlement service provider regarding the same transaction? h. If you refer current borrowers to other lenders, including affiliates, in response to inquiries about refinancings or other new loans, do you receive any payments in connection with the referrals? i. If yes, then are the payments for the referrals or are they reasonable fees for actual services rendered? i. When you hire third parties to perform services, e.g., to appraise property securing loans or to list foreclosed properties for sale, do you not select them based on past or anticipated referrals made to you or your affiliates? 12. Section 9 Title Companies a. When you are the seller of property, such as foreclosed or OREO properties, do you allow the buyer to purchase title insurance from a company of his or her choice, with no financial incentive encouraging selection of your preferred insurer? 13. Recordkeeping; Fees a. Do you keep records as required? i. HUD-1 or HUD-1A for five years after settlement, unless you transfer your interest in the loan and do not service the loan, in which case you must provide a copy of the HUD-1 or HUD-1A to the owner or servicer as a part of the transfer of the loan file? ii. Records reflecting your handling of any escrow account, including the payment of amounts into and from the account and the submission of initial and annual escrow statements to the borrower? iii. AfBA Disclosures for at least five years after settlement? iv. Documentation of any reason for issuing a revised GFE for at least three years after settlement? b. Do you not impose a charge for preparing or distributing HUD-1 or HUD-1A Settlement Statements, escrow account statements, or Truth-in-Lending statements?

9 Ck-7 Compliance Checklists Checklist 1: Lender Checklist c. Do you not impose any charge, except for a credit report fee, before providing a GFE? 14. Auditing Follow-up a. Have any deficiencies noted in previous examinations or internal audits been corrected? b. For any violation, determine whether it is an isolated incident or a pattern or practice. i. If it is a pattern or practice, review your forms, policies, and procedures to ensure they are in compliance. ii. If it is a pattern or practice, review your system for communicating the regulatory requirements and any changes. iii. If it is a pattern or practice, review your training procedures. c. Discuss any findings with your legal counsel before communicating them in writing. d. Discuss findings with management. Broker Checklist This checklist is intended for use by brokers, whether they are table-funded, correspondent, or other. 1. Compilation of Documents a. Obtain samples of the following documents: i. Special Information Booklet. Checklist 2: Broker Checklist ii. For open-end plans, Federal Reserve Board brochure When Your Home is On the Line: What You Should Know About Home Equity Lines of Credit. iii. Good Faith Estimate (GFE). iv. Application Servicing Transfer Disclosure. v. HUD-1 Settlement Statement. vi. HUD-1A Settlement Statement, if used. vii. Initial Escrow Statement. viii. Affiliated Business Arrangement (AfBA) Disclosure, if appropriate. ix. Closing Escrow Disclosure. x. Annual Escrow Account Statement. xi. Notice of Servicing Transfer, if appropriate. 2. Types of Loans a. What types of loans do you make or broker subject to RESPA? i. Purchase money mortgage loans. ii. Refinancings. iii. Mortgage loans secured by subordinate liens. iv. Open-end home equity lines of credit. v. Reverse mortgage loans. 3. Special Information Booklets a. Are Special Information Booklets provided to at least one applicant at application? [These are not required for refinances, subordinate liens and reverse mortgage loans; not required if loan is declined or withdrawn within three business days after receipt of application.] b. Do the booklets match the prescribed form?

10 THE RESPA MANUAL Ck-8 Checklist 2: Broker Checklist i. If not, are the differences permitted changes or have they been specifically approved by the CFPB? c. For open-end home equity lines of credit, do you provide the Federal Reserve booklet When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit instead of the HUD booklet [optional in place of Special Information Booklet]? 4. Good Faith Estimates (GFEs) a. Are Good Faith Estimates complete and accurate? [GFEs are not required for open-end lines of credit if Truth-in-Lending (TIL) disclosures are made; GFEs are not required for a loan declined within three business days after receipt of the application.] b. Do the forms match the prescribed GFE form? c. Did you follow the official instructions for completion of the GFE form? d. Are GFEs provided to at least one applicant within three business days after application? e. Does each GFE properly estimate each fee that appears on the HUD-1 for the same transaction? i. If fees were not properly estimated, have you reviewed the fees actually charged, and updated your GFE disclosure process? f. If both you and a lender provided GFEs, do the GFEs match for each transaction? i. If the GFEs do not match, have you resolved the differences and made any necessary changes or discussed changes with the lender? g. Did you disclose direct and indirect broker fees as appropriate? 5. Prequalification Programs a. Do you offer any prequalification programs, including computer-assisted application-taking programs that prequalify inquirers? If yes, are Special Information Booklets and Good Faith Estimates given at the appropriate time? 6. HUD-1 and HUD-1A Settlement Statements a. Are HUD-1s or HUD-1As complete and accurate? i. Do the forms match the prescribed forms? A. If not, are the differences permitted changes or have they been specifically approved by the CFPB? b. Does the HUD-1 or HUD-1A information match the estimates given on the GFE for the same transaction? i. If fees were not properly estimated, have you reviewed the fees actually charged and updated your GFE disclosure process? c. Do other closing disbursement statements and receipts contained in file, along with the schedule of fees imposed by you and/or the lender, confirm the accuracy of the HUD-1 or HUD-1A information? d. Are all fees appropriately included and marked P.O.C. as required? e. Were HUD-1 or HUD-1A instructions followed? f. Did you make the HUD-1 or HUD-1A available one day before settlement at the borrower s request? g. Were the HUD-1 or HUD-1A forms delivered to at least one borrower as required? h. Did you disclose direct and indirect broker fees as appropriate? 7. Affiliated Business Arrangements a. Are you involved in any affiliated business arrangements? i. If yes, do you give AfBA disclosures?

11 Ck-9 Compliance Checklists Checklist 2: Broker Checklist ii. Do you give the AfBA disclosure at the time of or before a referral or within three business days after any referral made by telephone? [Exception: A lender may provide the disclosure with the GFE.] iii. Do you have a process in place to ensure AfBA disclosures are provided when appropriate? A. Are the disclosures in proper form? B. Does the form state use of the settlement service provider is not required? [Exceptions: A lender may require the use of a particular attorney, credit bureau or appraiser.] C. Does the form describe the nature of the relationship with the provider? D. Does the form give the estimated charge or range of charges made by the provider? E. Does the form include the required text from Regulation X? iv. Is use of the provider in fact not required? [Exceptions: A lender may require the use of a particular attorney, credit bureau or appraiser.] v. Do you receive only a return on ownership or franchise interest or other payment permitted by RESPA? b. Is each affiliated business a bona fide provider of settlement services, rather than a sham arrangement? 8. Computer Loan Origination Systems a. Do you charge a CLO Access Fee? b. Is the fee reasonable compensation for services rendered? 9. Servicing Transfers a. Application Servicing Transfer Disclosures i. Do you give Application Servicing Transfer Disclosures? [If you are not the lender, the lender will give these disclosures. These disclosures are not required for subordinate lien loans or open-end lines of credit.] A. Do you give them at application, for face-to-face interviews? B. Do you give them or mail them within three business days after application, if there is no face-to-face interview? I. If an application shows different addresses for the applicants, do you send a copy to each address? C. Do your forms compare to the model forms? [The exact language is not required, except for the form of acknowledgment.] D. Is each Application Servicing Transfer Disclosure accurate? b. Notices of Servicing Transfer i. Did you provide Notices of Servicing Transfer not more than 15 calendar days after the date of transfer when you were the transferee servicer; not less than 15 calendar days before transfer when you were the transferor servicer? [You will not give these unless you are the lender or servicer. These are not required for subordinate lien loans or open-end lines of credit.] A. Do your forms match the model forms? [You may only make minor modifications to meet your particular circumstances.] c. Servicing Transfer Procedures [These procedures apply only if you are a lender or servicer.] i. Do you not impose late fees or treat payments as late within 60 calendar days of a servicing transfer, if the old servicer receives payment on or before the due date (including any grace period)? ii. Do you follow the required servicing inquiry procedures?

12 THE RESPA MANUAL Ck-10 Checklist 2: Broker Checklist A. Do you acknowledge receipt of qualified written requests within 20 business days? B. Do you resolve each request within 60 business days? C. Do you not report adverse information regarding any payment subject to a qualified written request, during the 60 business days following its receipt? iii. If you were a transferee servicer, did you provide an initial escrow account statement within 60 calendar days after the date of transfer if you changed either the monthly payment amount or the accounting method? iv. If you transferred servicing, did you provide short-year statements to the borrowers within 60 calendar days of the date of transfer? 10. Escrow Accounts [These requirements apply only if you are a lender or servicer.] i. Do you require or maintain escrow accounts? a. General Procedural Requirements i. Before establishing each escrow account, do you conduct an escrow account analysis to determine the amount the borrower must deposit into the account, within the limitations of Sec (c)? ii. For each account, have you reviewed the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. For each account, do you conduct an escrow analysis at the end of each escrow account computation year? b. Initial Escrow Account Statements i. Do you provide an initial escrow account statement at closing or not later than 45 calendar days after an escrow account is established? A. Does each initial escrow account statement include: I. monthly mortgage and escrow payments? II. III. IV. estimated taxes? estimated insurance premiums, and other disbursements to be made in the first year after the account is established? any cushion amount? V. a trial running balance? B. Do you provide the initial escrow account statement substantially in the format prescribed by Appendix G of Regulation X? c. Annual Escrow Account Statements i. Do you provide annual escrow account statements not less than once each 12-month period and not more than 30 calendar days after the end of each 12-month period? ii. Does each annual escrow account statement include: A. the amount of current monthly mortgage and escrow payments? B. the amount of the past year s monthly mortgage and escrow payments? C. the total amount paid into escrow during the past year? D. the total amount paid out of escrow during the past year for taxes, insurance, and other charges? E. the balance in escrow at end of the period? F. an explanation of how any surplus is being handled? G. an explanation of how any shortage or deficiency is to be paid by the borrower? H. an explanation of why the estimated low monthly balance was not reached, if applicable?

13 Ck-11 Compliance Checklists d. Escrow Procedures Checklist 2: Broker Checklist i. Have you implemented aggregate analysis escrow accounting for post-rule accounts, effective May 24, 1995, in accordance with Section (c) and (d)? ii. For each account, have you reviewed the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. When an escrow account analysis shows a surplus of $50 or more and the borrower is current, do you refund the surplus within 30 calendar days? iv. Do you notify a borrower at least once during any computation year in which there is a shortage or deficiency in the escrow account? v. Do you provide short-year statements to borrowers who pay off, within 60 calendar days of the pay-off? vi. Do you make timely payments of all items disbursed from the escrow account (for current borrowers)? 11. Section 8 Prohibitions of Kickbacks and Unearned Fees a. Have you reviewed your policies and practices regarding the entertainment of referral sources and settlement service providers? i. Do you provide any meals or entertainment in connection with educational presentations about your products, programs, and offerings? ii. If meals and entertainment are not related to educational presentations, are they offered to a variety of participants regardless of whether they have referred or may refer business to you? b. Do you offer promotional items to actual or potential sources of referrals? If so, do the items have only nominal value? i. If so, do you not give them in return for a referral? c. Have you reviewed all disbursements made and compensation received in connection with federally related mortgage loans? i. Have you taken seriously and investigated any suggestions that payments may have been made in return for referrals? d. Are fees paid, gifts given, or other things of value provided to outside parties? i. What services are rendered in return? ii. Is each payment reasonable for the services rendered? e. Do you pay fees or other things of value to employees for referring business to your affiliates? f. Do you receive fees or other things of value from third parties? i. What services do you render? ii. Are the fees reasonable for the services rendered? iii. Do you pay more or less than fair market rental value for any leased office space or equipment? g. From whom do you receive referrals? i. What compensation or other things of value, if any, do you pay to the referrors? In each case, is the compensation reasonable for services actually rendered? ii. Do you charge more or less than fair market rental value for any leased office space or equipment? h. Have you reviewed the following situations for possible Section 8 issues: i. All offers of prizes?

14 THE RESPA MANUAL Ck-12 Checklist 2: Broker Checklist ii. Any discounted rental payments or other fees you are charged for services rendered or goods furnished? iii. Any free or discounted goods or services you offer? iv. All promotional items you give away? v. All equipment furnished by or to you at discounted or free rental rates? vi. Any percentage-based fees, other than your broker fees in amounts up to what is common in your market(s)? vii. Any fees paid by you for application-taking or processing services? viii. Any special arrangements made with certain referrors and not with others, particularly if the beneficiaries are persons who make substantial referrals? ix. Multiple payments to the same settlement service provider regarding the same transaction? i. If you refer current borrowers to other lenders, including affiliates, in response to inquiries about refinancings or other new loans, do you receive any payments in connection with the referrals? i. If yes, then are the payments for the referrals or are they reasonable fees for actual services rendered? j. When you hire third parties to perform services, e.g., to appraise property securing loans or to list foreclosed properties for sale, do you not select them based on past or anticipated referrals made to you or your affiliates? 12. Section 9 Title Companies a. When you are the seller of property, such as foreclosed or OREO properties, do you allow the buyer to purchase title insurance from a company of his or her choice, with no financial incentive encouraging selection of your preferred insurer? 13. Recordkeeping; Fees a. Do you keep records as required? i. HUD-1 or HUD-1A for five years after settlement, unless you transfer your interest in the loan and do not service the loan, in which case you must provide a copy of the HUD-1 or HUD-1A to the owner or servicer as a part of the transfer of the loan file? ii. Documentation to justify issuance of any revised GFE for at least three years after settlement? iii. Records reflecting your handling of any escrow account, including the payment of amounts into and from the account and the submission of initial and annual escrow statements to the borrower. iv. AfBA Disclosures for at least five years after settlement. b. Do you not impose a charge for preparing or distributing HUD-1 or HUD-1A Settlement Statements, escrow account statements, or Truth-in-Lending statements? 14. Auditing Follow-up a. Have any deficiencies noted in previous examinations or internal audits been corrected? b. For any violation, determine whether it is an isolated incident or a pattern or practice. i. If it is a pattern or practice, review your forms, policies and procedures to ensure they are in compliance. ii. If it is a pattern or practice, review your system for communicating the regulatory requirements and any changes. iii. If it is a pattern or practice, review your training procedures. c. Discuss any findings with your legal counsel before communicating them in writing. d. Discuss findings with management.

15 Ck-13 Compliance Checklists Servicer Checklist 1. Compilation of Documents a. Obtain samples of the following documents: b. Application Servicing Transfer Disclosure. c. HUD-1 Settlement Statement. d. HUD-1A Settlement Statement, if used. e. Initial Escrow Statement. f. Closing Escrow Disclosure. g. Annual Escrow Account Statement. h. Notice of Servicing Transfer, if appropriate. 2. Types of Loans Checklist 3: Servicer Checklist a. What types of loans do you service subject to RESPA? b. Purchase money mortgage loans. c. Refinancings. d. Mortgage loans secured by subordinate liens. e. Open-end home equity lines of credit. f. Reverse mortgage loans. 3. Refinancings a. Do you refinance or make other types of loans, or act as a mortgage broker, when current borrowers inquire? b. If yes, then refer to the Lender Checklist or Broker Checklist. 4. Servicing Transfers a. Notices of Servicing Transfer i. Did you provide Notices of Servicing Transfer not more than 15 calendar days after the date of transfer when you were the transferee servicer; not less than 15 calendar days before transfer when you were the transferor servicer? [These are not required for subordinate lien loans or open-end lines of credit.] A. Do your forms match the model forms? [You may only make minor modifications to meet your particular circumstances.] b. Servicing Transfer Procedures i. Do you not impose late fees or treat payments as late within 60 calendar days of a servicing transfer, if the old servicer receives payment on or before the due date (including any grace period)? ii. Do you follow the required servicing inquiry procedures? A. Do you acknowledge receipt of qualified written requests within 20 business days? B. Do you resolve each request within 60 business days? C. Do you not report adverse information regarding any payment subject to a qualified written request, during the 60 business days following its receipt? iii. If you were a transferee servicer, did you provide an initial escrow account statement within 60 calendar days after the date of transfer if you changed either the monthly payment amount or the accounting method? iv. If you transferred servicing, did you provide short-year statements to the borrowers within 60 calendar days of the date of transfer?

16 THE RESPA MANUAL Ck Escrow Accounts i. Do you maintain escrow accounts? a. General Procedural Requirements Checklist 3: Servicer Checklist i. Before establishing each escrow account, do you conduct an escrow account analysis to determine the amount the borrower must deposit into the account, within the limitations of Sec (c)? ii. For each account, did you review the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. For each account, do you conduct an escrow analysis at the end of each escrow account computation year? b. Initial Escrow Account Statements i. Do you provide an initial escrow account statement not later than 45 calendar days after an escrow account is established? A. Does each initial escrow account statement include: I. monthly mortgage and escrow payments? II. III. IV. estimated taxes, estimated insurance premiums, and other disbursements to be made in the first year after the account is established? any cushion amount? a trial running balance? B. Do you provide the initial escrow account statement substantially in the format prescribed by Appendix G of Regulation X? c. Annual Escrow Account Statements i. Do you provide annual escrow account statements not less than once each 12-month period and not more than 30 calendar days after the end of each 12-month period? A. Does each annual escrow account statement include: I. the amount of current monthly mortgage and escrow payments? II. III. IV. the amount of the past year s monthly mortgage and escrow payments? the total amount paid into escrow during the past year? the total amount paid out of escrow during the past year for taxes, insurance, and other charges? V. the balance in escrow at end of the period? VI. d. Escrow Procedures an explanation of how any surplus is being handled? VII. an explanation of how any shortage or deficiency is to be paid by the borrower? VIII. an explanation of why the estimated low monthly balance was not reached, if applicable? i. Have you implemented aggregate analysis escrow accounting for post-rule accounts, effective May 24, 1995, in accordance with Section (c) and (d)? ii. For each account, have you reviewed the underlying mortgage documents to determine whether a cushion is permitted and, if so, the appropriate cushion limitations? iii. When an escrow account analysis shows a surplus of $50 or more and the borrower is current, do you refund the surplus within 30 calendar days? iv. Do you notify a borrower at least once during any computation year in which there is a shortage or deficiency in the escrow account?

17 Ck-15 Compliance Checklists Checklist 3: Servicer Checklist v. Do you provide short-year statements to borrowers who pay off, within 60 calendar days of the pay-off? vi. Do you make timely payments of all items disbursed from the escrow account (for current borrowers)? 6. Section 8 Prohibition of Kickbacks and Unearned Fees a. If you refer current borrowers to other lenders, including affiliates, in response to inquiries about refinancings or other new loans, do you receive any payments in connection with the referrals? i. If yes, then are the payments for the referrals or are they reasonable fees for actual services rendered? b. When you hire third parties to perform services, e.g., to appraise property securing loans or to list foreclosed properties for sale, do you not select them based on past or anticipated referrals made to you or your affiliates? 7. Recordkeeping; Fees a. Do you keep records as required? i. HUD-1 or HUD-1A for five years after settlement? ii. Records reflecting your handling of any escrow account, including the payment of amounts into and from the account and the submission of initial and annual escrow statements to the borrower? iii. AfBA Disclosures for at least five years after settlement? b. Do you not impose a charge for preparing or distributing escrow account statements? 8. Auditing Follow-up a. Have any deficiencies noted in previous examinations or internal audits been corrected? b. For any violation, determine whether it is an isolated incident or a pattern or practice. i. If it is a pattern or practice, review your forms, policies and procedures to ensure they are in compliance. ii. If it is a pattern or practice, review your system for communicating the regulatory requirements and any changes. iii. If it is a pattern or practice, review your training procedures. c. Discuss any findings with your legal counsel before communicating them in writing. d. Discuss findings with management. Checklist for Other Service Providers 1. Compilation of Documents a. Obtain samples of the following documents: Checklist 4: Checklist for Other Service Providers i. Affiliated Business Arrangement (AfBA) Disclosure, if appropriate. 2. Types of Services a. What types of services do you provide in connection with loans subject to RESPA? 3. Fees and Disclosures for the Good Faith Estimate and HUD-1 or HUD-1A Settlement Statements a. Have you provided your schedule of fees to the lender or broker? 4. Affiliated Business Arrangements

18 THE RESPA MANUAL Ck-16 Checklist 4: Checklist for Other Service Providers a. Are you involved in any affiliated business arrangements with the lender, broker or any other provider to whom you refer business? i. If yes, do you give AfBA disclosures? ii. Is the AfBA disclosure given at the time of or before a referral or within three business days after any referral made by telephone? [Exceptions: A lawyer or law firm requiring the use of a particular title insurance agent must provide the disclosures when the client engages the attorney or law firm.] iii. Do you have a process in place to ensure AfBA disclosures are provided when appropriate? iv. Are the disclosures in proper form? A. Does the form state use of the settlement service provider to which you refer business is not required? [Exceptions: An attorney may require the use of a title insurance agency operated adjunct to his or her law practice, except when a seller requires use of the attorney.] B. Does the form describe the nature of your relationship with the provider? C. Does the form give the estimated charge or range of charges made by the provider? D. Does the form include the required text from Regulation X? v. Is use of the provider in fact not required? [Exceptions: A lawyer or law firm may require the use of an adjunct title insurance agency, unless a seller requires use of the lawyer or law firm.] vi. Do you receive only a return on ownership or franchise interest or other payment permitted by RESPA? b. Is each affiliated business a bona fide provider of settlement services, rather than a sham arrangement? 5. Computer Loan Origination Systems a. Do you charge a CLO Access Fee? i. Is the fee reasonable compensation for services rendered? 6. Section 8 Prohibitions of Kickbacks and Unearned Fees a. Have you reviewed your policies and practices regarding the entertainment of referral sources and those who hire you to perform services? i. Do you provide any meals or entertainment in connection with educational presentations about your products, programs and offerings? ii. If meals and entertainment are not related to educational presentations, do you offer them to a variety of participants regardless of whether they have referred or may refer business to you? iii. Do you offer promotional items to actual or potential sources of referrals? If so, do the items have only nominal value? b. Have you reviewed all disbursements made and compensation received in connection with federally related mortgage loans? i. Have you taken seriously and investigated any suggestions that payments may have been made in return for referrals? ii. Do you pay fees, give gifts, or offer other things of value to outside parties involved in federally related mortgage loans? A. What services are rendered in return? B. Is each payment reasonable for the services rendered? c. Do you pay fees or other things of value to employees for referring business to your affiliates? i. Are the employees managerial employees whose compensation is not calculated as a multiple of the number or value of referrals?

19 Ck-17 Compliance Checklists Checklist 4: Checklist for Other Service Providers ii. Do the employees perform any settlement services? d. Do you receive fees or other things of value from third parties in connection with federally related mortgage loans? i. What services do you render? ii. Are the fees reasonable for the services rendered? iii. From whom do you receive referrals? iv. Do you pay more or less than fair market rental value for any leased office space or equipment? e. From whom do you receive referrals? i. What compensation or other things of value, if any, do you pay to the referrors? ii. Do you charge more or less than fair market rental value for any leased office space or equipment? f. Have you reviewed the following situations for possible Section 8 issues: i. All offers of prizes? ii. Any discounted rental payments or other fees you are charged for services rendered or goods furnished? iii. Any free services or discounted goods or services you offer? iv. All promotional items you give away? v. All equipment you furnish or receive at discounted or free rental rates? vi. Any percentage-based fees? vii. Any special arrangements you make with certain referrors and not with others, particularly if the beneficiaries are persons who make substantial referrals? 7. Recordkeeping; Fees a. Do you keep records as required? i. AfBA Disclosures must be kept at least five years after settlement. 8. Auditing Follow-up a. Have any deficiencies noted in previous examinations or internal audits been corrected? b. For any violation, determine whether it is an isolated incident or a pattern or practice. i. If it is a pattern or practice, review your forms, policies and procedures to ensure they are in compliance. ii. If it is a pattern or practice, review your system for communicating the regulatory requirements and any changes. iii. If it is a pattern or practice, review your training procedures. c. Discuss any findings with your legal counsel before communicating them in writing. d. Discuss findings with management.

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