Real Estate Settlement Procedures Act (Regulation X); Escrow Accounting Procedures: Correcting Amendment and Clarifications

On October 26, 1994, HUD published a final rule establishing escrow accounting procedures under Sections 6(g) and 10 of the Real Estate Settlement Procedures Act. The final rule was modified on February 15, 1995, and the effective date was changed to May 24, 1995. Today's issuance corrects references in Sec. 3500.8(c)(1) and in Appendix A regarding responsibilities of servicers and settlement agents. This issuance also explains a reference in the commentary of the February 15 modification to a borrower's discretionary payments, such as credit life insurance, in relation to escrow accounts. Several appendices have been revised to illustrate how payments for credit life insurance and similar discretionary payments should be referenced. In addition, the issuance clarifies certain situations involving installment payments and discounts or penalties.