Mortgages Analyzed
Mortgages Analyzed
Mortgages Analyzed
 
Servicing Disclosure Statement

What is Servicing Disclosure Statement?

Servicing Disclosure Statement

Servicing Disclosure Statement is a disclosure wherein the lender indicates whether or not the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding. The disclosure is provided to the applicant by the processor or the loan originator/sales team of lender or the broker.

The lender or broker is required to send the disclosure is required as per Consumer Finance Protection Board (CFPB) Regulation X 12 CFR 1024. Regulation X implements Real Estate Settlement Procedures Act (RESPA).

Source :www.MortgagesAnalyzed.com

Contents of Servicing Disclosure Statement

The Appendix MS-1 of regulation X is a model template that provides the content requirements of the template. The regulations do not require the specific language in the model to be used. Also, the model format may be annotated with additional information that clarifies or enhances the model language and best describes the particular circumstances.

Based on the model format and requirements in Regulation X, the Servicing Disclosure Statement should contain the following:

  1. Date: The date when the disclosure document was prepared.
  2. Title: SERVICING DISCLOSURE STATEMENT NOTICE TO FIRST LIEN MORTGAGE LOAN APPLICANTS: THE RIGHT TO COLLECT YOUR MORTGAGE LOAN PAYMENTS MAY BE TRANSFERRED
  3. Disclosure: You are applying for a mortgage loan covered by the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2601 et seq.). RESPA gives you certain rights under Federal law. This statement describes whether the servicing for this loan may be transferred to a different loan servicer. "Servicing" refers to collecting your principal, interest, and escrow payments, if any, as well as sending any monthly or annual statements, tracking account balances, and handling other aspects of your loan. You will be given advance notice before a transfer occurs.
  4. Servicing Transfer Information: The lender will make a choice from the three options below:
    1. We may assign, sell, or transfer the servicing of your loan while the loan is outstanding.
    2. We do not service mortgage loans of the type for which you applied. We intend to assign, sell, or transfer the servicing of your mortgage loan before the first payment is due.
    3. The loan for which you have applied will be serviced at this financial institution and we do not intend to sell, transfer, or assign the servicing of the loan.

Additionally, the disclosure may contain the following optional items:

  1. Application Number
  2. Applicant(s) Names: Name of all the applicants.
  3. Property Address: Address of the subject property.
Source :www.MortgagesAnalyzed.com

Borrower's Considerations

Customer Service

Through this disclosure, the lender is informing you whether or not it will perform the servicing on the loan. If you are obtaining a loan from the lender because of its customer service and the lender is indicating on the disclosure that it may transfer or not service the loan, then it means you will have to deal with another institution and may not get the customer service that you had expected.

Source :www.MortgagesAnalyzed.com

Lender's Considerations

Loans for Which Servicing Disclosure Statement is Required

The disclosure must be given for loan applications that are covered under RESPA, which includes applications for all loans secured by real estate except for:

  1. A loan on property of 25 acres or more
  2. Business purpose loans
  3. Temporary financing
  4. Vacant land
  5. Loan assumption without lender approval
  6. Loan conversions
  7. Secondary market transactions

Refer to the details in regulation X to confirm whether the exemption applies to your specific circumstances.

Source :www.MortgagesAnalyzed.com

Who is required to provide the Servicing Disclosure Statement?

The Servicing Disclosure Statement must be sent by the lender, table funding mortgage broker, or dealer that anticipates a first lien dealer loan. As a best practice, you must always deliver the disclosure to the loan applicants as part of your 3-day disclosure packet.

Timing and Delivery of the Servicing Disclosure Statement

Timing

The Servicing Disclosure Statement must be delivered within three business days from receipt of the application. The disclosure is not required to be delivered if the loan application is denied within the 3 business-day period.

Delivery

The disclosure may be delivered by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, e-mail, or other electronic means. If co-applicants provide the same address on their application, one copy delivered to that address is sufficient. If different addresses are provided by co-applicants on the application, a copy must be delivered to each of the co-applicants.

Source :www.MortgagesAnalyzed.com

Recordkeeping

A copy of the Servicing Disclosure Statement should be maintained in the loan file, along with all other origination documents, as evidence of compliance with Regulation X. While, Regulation X does not specifically prescribe recordkeeping requirements for Servicing Disclosure Statement, it requires other documents to be retained for five years from the date of execution. Therefore, we recommend retaining the Servicing Disclosure Statement at a minimum of at least five years from closing date and preferably as long as the loan is outstanding.

Post-Closing Quality Control

As part of post-closing quality review, verify:

  1. The content of the disclosure meets the RESPA requirements and contains:
    1. Date of delivery
    2. Applicant(s) name
    3. Name of the lender
    4. Disclosure statement required by RESPA. Based on the intent of the lender, the correct verbiage must be chosen for the disclosure.
  2. The disclosure is sent within three business days from the date of application.
  3. The disclosure is sent to correct addresses of each co-applicant.
  4. A copy of the disclosure is retained in the loan file.
  5. For electronic delivery, evidence of the delivery is available. An example would be the event tracker in the Loan Origination System or other means.
Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Servicing Disclosure Statement
Purpose
Servicing Disclosure Statement is a disclosure wherein the lender indicates whether or not the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.
Use in Mortgages
The disclosure is used to inform the loan applicant if the lender intends to service the loan or not.
Other Names
None
Type
Disclosure
Provided By
Loan Originator (Lender/Broker)
Provided To
Loan Applicants
Notarization Required
No
Signed By
None
Life Cycle Stage
Origination
Recordkeeping
Retain for as long as the loan is outstanding, but at minimum of at least five years from closing date.
Model Form
Appendix MS-1 of Regulation X
Applicable Laws
CFPB Regulation X (12 CFR 1024)
Source :www.MortgagesAnalyzed.com
 

External Links

  1. CFPB Regulation X, 12 CFR 1024.33 Mortgage servicing transfers
  2. CFPB Regulation X, 12 CFR 1024.5 Coverage of RESPA

Updated: Sep 08, 2013

Comments

comments powered by Disqus
Disclosure wherein lender indicates whether or not the servicing of the loan may be transferred to any other person
Finance
Know all there is to know about the US Mortgage Industry. We help you to make a well informed decision.
Finance
Loan Products
Confused about the choosing right loan product for you? We help you decide the loan product that suits your needs best.
Loan Products
Documents
Here you will find all there is to know about the forms, papers & documents required for Home Loan Mortgage and much more.
Documents
Regulation
List of all the Regulations related to US Mortgage Industry.
Regulations