FCA Info Memo - Real Estate Settlement Procedures Act Amendments

Informational Memorandum
Subject:	Real Estate Settlement Procedures Act Amendments
Date of Memorandum:	04/01/1997
Expiration Date:
Office:	OE
Signed By:	Smith, Roland
FCA Contact Person:	Holland, Tom
Contact Phone:	703-883-4484
List of Attachments:	Three issuances from HUD

April 1, 1997

To: The Chief Executive Officer
All Farm Credit System Institutions

From: Roland E. Smith, Director /s/
Office of Examination

Subject: Informational Memorandum--Real Estate Settlement Procedures Act Amendments; Regulatory Streamlining

The Farm Credit Administration (FCA) is distributing three separate issuances from the Department of Housing and Urban Development (HUD) that address regulatory amendments to Regulation X (24 CFR § 3500 et seq.), which implements the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq., hereafter referred to as RESPA). Although the first issuance originated a year ago, details were not fully clarified until last fall. The purpose of RESPA is to provide borrowers pertinent and timely disclosures regarding the nature and costs of real estate settlements.

The amendments are the result of streamlining efforts by HUD to eliminate provisions that repeat statute or are otherwise unnecessary. Additionally, a number of appendices that were intended to be illustrative rather than regulatory have been removed. This effort was intended to make the RESPA regulations clearer and more concise.

A. 61 FR 13232, March 26, 1996, Final Rule. This rule was effective April 25, 1996. In addition to a number of minor changes, the rule was intended to remove the following from the regulation:

Appendix G

-- consisting of (1) Appendix G-1 entitled "Initial Escrow Account Disclosure Statement - Format," published at 60 FR 24736, May 9, 1995; and (2) Appendix G-2 entitled "Initial Escrow Account Disclosure Statement - Example," published at 60 FR 8819, February 15, 1995, but amended at 60 FR 24735, May 9, 1995;

Appendix H

-- consisting of Appendix H-1 and Appendix H-2, each entitled "Biweekly Payments - Example," published at 60 FR 8820 - 8821, February 15, 1995;

Appendix I

-- consisting of (1) Appendices I-1, I-2, I-5, and I-6, each entitled "Annual Escrow Account Disclosure Statement - Format," published at 60 FR 24737-24740, May 9, 1995; and (2) Appendices I-3, I-4, I-7, and I-8, each entitled "Annual Escrow Account Disclosure Statement - Example," published at 60 FR 8824, 8825, 8828, and 8829, February 15, 1995;

Appendix J

-- consisting of Appendices J-1 and J-2, each entitled "Annual Escrow Account Disclosure Statement - Example," published at 60 FR 8830-8831, February 15, 1995;

Appendix K

-- consisting of Appendices K-1 through K-4, each entitled "Short Year Statements - Example," published at 60 FR 8832-8835, February 15, 1995;

Appendix L

-- "Side-by-Side Presentation of Old Projection and History," published at 60 FR 8836, February 15, 1995;

Appendix M

-- "Illustration of Option of Identifying Simultaneous Deficiency and Shortage," published at 60 FR 8837, February 15, 1995;

Appendix N

-- "HUD-1 Aggregate Accounting Adjustment Example," published at 60 FR 8838, February 15, 1995.

These appendices remain applicable, and the examples and explanations are very helpful. However, it is not necessary that they be published in the

Federal Register

. In addition to removing these appendices, this rule moved the investigation provisions from 24 CFR § 3500.20 to a new § 3800.

B. 61 FR 18674, April 29, 1996, Correction to Final Rule published at 61 FR 13232. Although the final rule published March 26, 1996, included the discussion and justification for removing Appendices G through N, the actual instructions to remove them were omitted from the rule text. This issuance included the rule text to remove the appendices. The effective date remains April 25, 1996. See comments in the next issuance for further correction of these instructions.

C. 61 FR 46510, September 3, 1996, Correction to Final Rule and Clarification. This is a technical clarification. The correction issued April 29, 1996, included instructions to remove Appendices G through M, unintentionally omitting instructions to remove Appendix N. This issuance included rule text to remove Appendix N. It also clarified ambiguous language by explaining that "post-rule account" and "pre-rule account" were defined in relation to May 24, 1995, and that the "phase-in period" runs from May 24, 1995, through October 27, 1997. This correction's effective date was October 8, 1996.

We encourage you to become familiar with applicable portions of these documents. If you have questions regarding this document or similar previous documents, please call Jerry Erickson in the Office of Examination at (703) 883-4483.

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