Settlement Cost Booklet is an informational booklet that helps the borrowers become familiar with the home-buying and mortgage process so that they make informed decisions and avoid common pitfalls. It includes topics such as steps in buying a home, mortgage process, fees, disclosures, understanding GFE and HUD-1, and other information.
Settlement Cost Booklet was last updated by US Department of Housing and Urban Development (HUD) in August 17, 2010.
The lender is required to provide a special information booklet as per §1024.6 Regulation X, which implements Real Estate Settlement Procedures Act (RESPA). Regulation X and provisions of RESPA are enforced by Consumer Finance Protection Bureau (CFPB). Settlement Cost Booklet is the special information booklet designed by HUD to meet the requirements of Regulation X.
The booklet is a good place to start for first time homebuyers and those looking to refinance. It provides a general overview of the process for buying a home and obtaining a mortgage loan. You will get familiar with some of the documents and disclosures. However, the guide is a general purpose document. You should work with your real estate agent and loan originator to understand the loan terms, fees, disclosures, and important steps in the process that allow to your particular circumstance.
You are required to provide the booklet for closed end first lien mortgage loans where the loan purpose is to purchase a 1 to 4 family residential property. In other words, send the booklet for loan applications when the following conditions are met:
Regulation X provides the following exceptions where you are not required to provide the booklet:
Regulation X requires you to deliver or place the booklet in the mail not later than three business days following receipt of the loan application. If you deny the loan application before the end of the three-business-day period, then you need not provide the booklet to the borrower. Business day means a day on which your offices are open to the public for carrying on substantially all of its business functions.
If the borrower is using a broker then the broker is required to send the booklet. In that case, you are not required to send the booklet and you can rely on the broker. However, you run the risk of non-compliance if the broker is not able to provide evidence of the delivery of the booklet. Therefore, we recommend sending the booklet yourself for all loans, irrespective of whether the broker is sending the booklet or not.
Do not make any changes to the content of the booklet. The only change allowed is to replace HUD’s name and address with that of CFPB. See the specific requirements of Regulation X before making any changes.
Regulation X gives you few options for reproducing the form.
An important question is how to evidence the delivery of the Booklet? There are various ways in which you can accomplish that:
For brokered loans, do not rely on the mortgage broker to send the disclosure on your behalf. You are responsible for ensuring compliance.
We recommend maintaining the evidence of delivery of booklet in the loan file for a period of at least five years from the date of settlement. The document retention period will be consistent with other record-keeping requirements of Regulation X. For declined, cancelled, or withdrawn applications, the evidence of delivery should be maintained for as long as the loan application file is maintained, which would normally be at least 25 months from date of action taken to be consistent with Regulation B recordkeeping requirements.
Updated: Oct 20, 2013