RESPA's record retention reach.

Q. What are the record retention requirements under the Real Estate Settlement Procedures Act when a bank sells a covered mortgage loan and transfers the servicing on the loan?

A. Regulation X, administered by the Department of Housing and Urban Development, does not address this issue

in a uniform manner. In Section 3500.10 (e) the recordkeeping requirement specifically allows a lender to remove itself from the general five-year retention requirement for the HUD-1 or HUD-1A and "related documents," if the Lender sells the Loan and transfers the servicing. In that case the retention responsibility shifts for whatever term remains of the five years to the new party. However, if you are transferring a Loan with an escrow account, there is a requirement that you retain those account records for "at least" five years after you Last serviced the account. (See, Section 3500.17(1) (2)) Another caveat: disclosures provided in connection with an affiliated business arrangement have their own retention requirement of five years under Section 3500.15(d)--and there is no express exception to this rule for loan sate or servicing transfer. (See also, Section 3500.14(e))

ABA experts have been answering selected banker questions in this space, while Bill Hood, who mans ABA's help desk for the association's Compliance Center, is on hiatus. To submit questions, write to the Compliance Center at ABA, 1120 Connecticut Ave., N.W., Washington, D.C. 20036; call at (202) 663-5491; or send an e-mail to compliance@aba.com. E-mailers please include bank name, phone number, and address.