Are we allowed to charge for periodic mortgage statements if we are a “small servicer” for mortgage servicing purposes, per Regulations X and Z?
Possibly, but we wouldn’t recommend it.
12 CFR §1024.12 of Regulation X (RESPA) states, “No fee shall be imposed or charge made upon any other person, as a part of settlement costs or otherwise, by a [mortgage] lender . . . or by a servicer . . . for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements required pursuant to section 10 of RESPA (12 U.S.C. 2609), or statements required by the Truth in Lending Act (15 U.S.C. 1601 et seq.) [emphasis added].” Regulation Z does have a small servicer exemption from the periodic statement requirement (12 CFR §1026.41(e)(4))—accordingly, periodic statements are not a required statement for small servicers under TILA. Nevertheless, charging for periodic mortgage statements raises UDAAP concerns, and may draw the unwanted attention of bank auditors or examiners. Mortgage statement fees should only be assessed, if at all, by small servicers that can demonstrate the fees are necessary to compensate the bank for an unusual cost or burden.
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