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(a) Statutory terms.
All terms defined in RESPA (12 U.S.C. 2602) are used in accordance
with their statutory meaning unless otherwise defined in paragraph (b)
of this section or elsewhere in this part.
(b) Other terms. As used in this part:
Application means the submission of a borrower's
financial information in anticipation of a credit decision, whether
written or computer-generated, relating to a federally related
mortgage loan. If the submission does not state or identify a specific
property, the submission is an application for a pre-qualification and
not an application for a federally related mortgage loan under this
part. The subsequent addition of an identified property to the
submission converts the submission to an application for a federally
related mortgage loan.
Business day means a day on which the offices of the
business entity are open to the public for carrying on substantially
all of the entity's business functions.
Dealer means, in the case of property improvement loans,
a seller, contractor, or supplier of goods or services. In the case of
manufactured home loans, ``dealer'' means one who engages in the
business of manufactured home retail sales.
Dealer loan or dealer consumer credit contract
means, generally, any arrangement in which a dealer assists the
borrower in obtaining a federally related mortgage loan from the
funding lender and then assigns the dealer's legal interests to the
funding lender and receives the net proceeds of the loan. The funding
lender is the lender for the purposes of the disclosure requirements
of this part. If a dealer is a ``creditor'' as defined under the
definition of ``federally related mortgage loan'' in this part, the
dealer is the lender for purposes of this part.
Effective date of transfer is defined in section 6(i)(1)
of RESPA (12 U.S.C. 2605(i)(1)). In the case of a home equity
conversion mortgage or reverse mortgage as referenced in this section,
the effective date of transfer is the transfer date agreed upon by the
transferee servicer and the transferor servicer.
Federally related mortgage loan or mortgage loan
means as follows:
(1) Any loan (other than temporary financing, such as a
construction loan):
(i) That is secured by a first or subordinate lien on
residential real property, including a refinancing of any secured loan
on residential real property upon which there is either:
(A) Located or, following settlement, will be constructed using
proceeds of the loan, a structure or structures designed principally
for occupancy of from one to four families (including individual units
of condominiums and cooperatives and including any related interests,
such as a share in the cooperative or right to occupancy of the unit);
or
(B) Located or, following settlement, will be placed using
proceeds of the loan, a manufactured home; and
(ii) For which one of the following paragraphs applies. The
loan:
(A) Is made in whole or in part by any lender that is either
regulated by or whose deposits or accounts are insured by any agency
of the Federal Government;
(B) Is made in whole or in part, or is insured, guaranteed,
supplemented, or assisted in any way:
(1) By the Secretary or any other officer or agency of the
Federal Government; or
(2) Under or in connection with a housing or urban development
program administered by the Secretary or a housing or related program
administered by any other officer or agency of the Federal Government;
(C) Is intended to be sold by the originating lender to the
Federal National Mortgage Association, the Government National
Mortgage Association, the Federal Home Loan Mortgage Corporation (or
its successors), or a financial institution from which the loan is to
be purchased by the Federal Home Loan Mortgage Corporation (or its
successors);
(D) Is made in whole or in part by a ``creditor'', as defined in
section 103(f)
of the Consumer Credit Protection Act (15 U.S.C. 1602(f)), that makes
or invests in residential real estate loans aggregating more than
$1,000,000 per year. For purposes of this definition, the term
``creditor'' does not include any agency or instrumentality of any
State, and the term ``residential real estate loan'' means any loan
secured by residential real property, including single-family and
multifamily residential property;
(E) Is originated either by a dealer or, if the obligation is to
be assigned to any maker of mortgage loans specified in paragraphs
(1)(ii) (A) through (D) of this definition, by a mortgage broker; or
(F) Is the subject of a home equity conversion mortgage, also
frequently called a ``reverse mortgage,'' issued by any maker of
mortgage loans specified in paragraphs (1)(ii) (A) through (D) of this
definition.
(2) Any installment sales contract, land contract, or contract
for deed on otherwise qualifying residential property is a federally
related mortgage loan if the contract is funded in whole or in part by
proceeds of a loan made by any maker of mortgage loans specified in
paragraphs (1)(ii) (A) through (D) of this definition.
(3) If the residential real property securing a mortgage loan is
not located in a State, the loan is not a federally related mortgage
loan. Good faith estimate means an estimate, prepared in
accordance with section 5 of RESPA (12 U.S.C. 2604), of charges that a
borrower is likely to incur in connection with a settlement.
HUD-1 or HUD-1A settlement statement (also HUD-1
or HUD-1A) means the statement that is prescribed by the Secretary in
this part for setting forth settlement charges in connection with
either the purchase or the refinancing (or other subordinate lien
transaction) of 1- to 4- family residential property.
Lender means, generally, the secured creditor or
creditors named in the debt obligation and document creating the lien.
For loans originated by a mortgage broker that closes a federally
related mortgage loan in its own name in a table funding transaction,
the lender is the person to whom the obligation is initially assigned
at or after settlement. A lender, in connection with dealer loans, is
the lender to whom the loan is assigned, unless the dealer meets the
definition of creditor as defined under ``federally related mortgage
loan'' in this section. See also Sec. 3500.5(b)(7), secondary market
transactions.
Managerial employee means an employee of a settlement
service provider who does not routinely deal directly with consumers,
and who either hires, directs, assigns, promotes, or rewards other
employees or independent contractors, or is in a position to
formulate, determine, or influence the policies of the employer.
Neither the term ``managerial employee'' nor the term ``employee''
includes independent contractors, but a managerial employee may hold a
real estate brokerage or agency license.
Manufactured home is defined in Sec. 3280.2 of this
title.
Mortgage broker means a person (not an employee or
exclusive agent of a lender) who brings a borrower and lender together
to obtain a federally related mortgage loan, and who renders services
as described in the definition of ``settlement services'' in this
section. A loan correspondent meeting the requirements of the Federal
Housing Administration under Sec. 202.2(b) or Sec. 202.15(a) of this
title is a mortgage broker for purposes of this part.
Mortgaged property means the real property that is
security for the federally related mortgage loan.
Person is defined in section 3(5) of RESPA (12 U.S.C.
2602(5)).
Public Guidance Documents means documents that HUD has
published in the Federal Register, and that it may amend from
time-to-time by publication in the Federal Register. These documents
are also available from HUD at the address indicated in 24 CFR 3500.3.
Refinancing means a transaction in which an existing
obligation that was subject to a secured lien on residential real
property is satisfied and replaced by a new obligation undertaken by
the same borrower and with the same or a new lender. The following
shall not be treated as a refinancing, even when the existing
obligation is satisfied and replaced by a new obligation with the same
lender (this definition of ``refinancing'' as to transactions with the
same lender is similar to Regulation Z, 12 CFR 226.20(a)):
(1) A renewal of a single payment obligation with no change in
the original terms;
(2) A reduction in the annual percentage rate as computed under
the Truth in Lending Act with a corresponding change in the payment
schedule;
(3) An agreement involving a court proceeding;
(4) A workout agreement, in which a change in the payment
schedule or change in collateral requirements is agreed to as a result
of the consumer's default or delinquency, unless the rate is increased
or the new amount financed exceeds the unpaid balance plus earned
finance charges and premiums for continuation of allowable insurance;
and
(5) The renewal of optional insurance purchased by the consumer
that is added to an existing transaction, if disclosures relating to
the initial purchase were provided.
Regulation Z means the regulations issued by the Board of
Governors of the Federal Reserve System (12 CFR part 226) to implement
the Federal Truth in Lending Act (15 U.S.C. 1601 et seq.), and
includes the Commentary on Regulation Z.
Required use means a situation in which a person must use
a particular provider of a settlement service in order to have access
to some distinct service or property, and the person will pay for the
settlement service of the particular provider or will pay a charge
attributable, in whole or in part, to the settlement service. However,
the offering of a package (or combination of settlement services) or
the offering of discounts or rebates to consumers for the purchase of
multiple settlement services does not constitute a required use. Any
package or discount must be optional to the purchaser. The discount
must be a true discount below the prices that are otherwise generally
available, and must not be made up by higher costs elsewhere in the
settlement process.
RESPA means the Real Estate Settlement Procedures Act of
1974, 12 U.S.C. 2601 et seq.
Servicer means the person responsible for the servicing
of a mortgage loan (including the person who makes or holds a mortgage
loan if such person also services the mortgage loan). The term does
not include:
(1) The Federal Deposit Insurance Corporation (FDIC) or the
Resolution Trust Corporation (RTC), in connection with assets
acquired, assigned, sold, or transferred pursuant to section 13(c) of
the Federal Deposit Insurance Act or as receiver or conservator of an
insured depository institution; and
(2) The Federal National Mortgage Corporation (FNMA); the
Federal Home Loan Mortgage Corporation (Freddie Mac); the RTC; the
FDIC; HUD, including the Government National Mortgage Association (GNMA)
and the Federal Housing Administration (FHA) (including cases in which
a mortgage insured under the National Housing Act (12 U.S.C. 1701 et
seq.) is assigned to HUD); the National Credit Union Administration (NCUA);
the Farmers Home Administration or its successor agency under Public
Law 103-354 (FmHA); and the Department of Veterans Affairs (VA), in
any case in which the assignment, sale, or transfer of the servicing
of the mortgage loan is preceded by termination of the contract for
servicing the loan for cause, commencement of proceedings for
bankruptcy of the servicer, or commencement of proceedings by the FDIC
or RTC for conservatorship or receivership of the servicer (or an
entity by which the servicer is owned or controlled).
Servicing means receiving any scheduled periodic payments
from a borrower pursuant to the terms of any mortgage loan, including
amounts for escrow accounts under section 10 of RESPA (12 U.S.C.
2609), and making the payments to the owner of the loan or other third
parties of principal and interest and such other payments with respect
to the amounts received from the borrower as may be required pursuant
to the terms of the mortgage servicing loan documents or servicing
contract. In the case of a home equity conversion mortgage or reverse
mortgage as referenced in this section, servicing includes making
payments to the borrower.
Settlement means the process of executing legally binding
documents regarding a lien on property that is subject to a federally
related mortgage loan. This process may also be called ``closing'' or
``escrow'' in different jurisdictions.
Settlement service means any service provided in
connection with a prospective or actual settlement, including, but not
limited to, any one or more of the following:
(1) Origination of a federally related mortgage loan (including,
but not limited to, the taking of loan applications, loan processing,
and the underwriting and funding of such loans);
(2) Rendering of services by a mortgage broker (including
counseling, taking of applications, obtaining verifications and
appraisals, and other loan processing and origination services, and
communicating with the borrower and lender);
(3) Provision of any services related to the origination,
processing or funding of a federally related mortgage loan;
(4) Provision of title services, including title searches, title
examinations, abstract preparation, insurability determinations, and
the issuance of title commitments and title insurance policies;
(5) Rendering of services by an attorney;
(6) Preparation of documents, including notarization, delivery,
and recordation;
(7) Rendering of credit reports and appraisals;
(8) Rendering of inspections, including inspections required by
applicable law or any inspections required by the sales contract or
mortgage documents prior to transfer of title;
(9) Conducting of settlement by a settlement agent and any
related services;
(10) Provision of services involving mortgage insurance;
(11) Provision of services involving hazard, flood, or other
casualty insurance or homeowner's warranties;
(12) Provision of services involving mortgage life, disability,
or similar insurance designed to pay a mortgage loan upon disability
or death of a borrower, but only if such insurance is required by the
lender as a condition of the loan;
(13) Provision of services involving real property taxes or any
other assessments or charges on the real property;
(14) Rendering of services by a real estate agent or real estate
broker; and
(15) Provision of any other services for which a settlement
service provider requires a borrower or seller to pay.
Special information booklet means the booklet prepared by
the Secretary pursuant to section 5 of RESPA (12 U.S.C. 2604) to help
persons understand the nature and costs of settlement services. The
Secretary publishes the form of the special information booklet in the
Federal Register. The Secretary may issue or approve additional
booklets or alternative booklets by publication of a Notice in the
Federal Register.
State means any State of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, and any territory or
possession of the United States.
Table funding means a settlement at which a loan is
funded by a contemporaneous advance of loan funds and an assignment of
the loan to the person advancing the funds. A table-funded transaction
is not a secondary market transaction (see Sec. 3500.5(b)(7)).
Title company means any institution, or its duly
authorized agent, that is qualified to issue title insurance.
Special NOTE: On June 7, 1996, Sec. 3500.2(b) was
amended by adding a definition of ``managerial employee'', effective
Oct. 7, 1996. At 61 FR 51782, Oct. 4, 1996, the effective date was
delayed until further notice.
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