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Dec 23, 2009
Categories: Home-Secured Lending

HELOCS and RESPA, Cont'd

Posted by Steve Van Beek

Yesterday, Sarah posted about whether the GFE was required for HELOCs.  The natural follow-up question is: Is a HUD-1 or HUD-1A also exempted?

The RESPA rule has the answer in 24 C.F.R. 3500.8(a):
"§ 3500.8 Use of HUD–1 or HUD–1A settlement statements. 
(a) Use by settlement agent. The settlement agent shall use the HUD–1 settlement statement in every settlement involving a federally related mortgage loan in which there is a borrower and a seller. For transactions in which there is a borrower and no seller, such as refinancing loans or subordinate lien loans, the HUD–1 may be utilized by using the borrower’s side of the HUD–1 statement. Alternatively, the form HUD–1A may be used for these transactions. The HUD–1 or HUD–1A may be modified as permitted under this part. Either the HUD–1 or the HUD–1A, as appropriate, shall be used for every RESPA-covered transaction, unless its use is specifically exempted. The use of the HUD–1 or HUD–1A is exempted for open-end lines of credit (home-equity plans) covered by the Truth in Lending Act and Regulation Z. "  (emphasis added).
Both this exemption and the GFE exemption existed in the old RESPA rule as well (although the GFE exemption was in 24 CFR 3500.7(f) and moved to subsection (h) in the new rule).  Perhaps this is the reason HUD did not include these questions in its FAQ document.  Anyway, it is a good lesson that sometimes the answers are right in the regulations themselves.  

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