In this issue we are pleased to republish an article written by Howard Lax of the law firm of Lipson, Neilson, Cole, Seltzer & Garin, P.C. in Bloomfield Hills, Michigan. To better understand Howard's article, some historical context may be helpful. In order to address widespread consumer confusion and complaints surrounding the mortgage servicing transfer process, RESPA was amended in 1990 to add a new Section 6 (12 U.S.C. 2605). Specifically, Section 6 required HUD to develop a model disclosure statement to be given to mortgage loan applicants containing the following information: (i) the possibility of the assignment, sale, or transfer of servicing rights to the loan; and (ii) the lender's historical practice in assigning, selling, and transferring servicing of loans, or, as an alternative to providing the historical data, a statement that the lender had previously sold servicing. Lenders were also required to keep a signed acknowledgment of receipt of the disclosure statement in the applicant's loan file. A copy of the model Servicing Disclosure Statement developed by HUD is available here. In 1996 Section 6 of RESPA was amended to eliminate the historical data provisions and the acknowledgment requirement. HUD issued proposed amendments to their regulations in 1997 to conform to the RESPA amendments; however, those regulations have never been adopted. Howard is quite correct to take HUD to task for failing to act in the more than 10 years that have passed since the RESPA amendments discussed in his article.

To view Howard's article, please click here.