HUD 1/1A and Privacy

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Question:

Does disclosing a service provider as a "borrower" or "customer of the bank" on the HUD 1 present a privacy issue? It just doesn't seem right. If they are both a frequently used servicer and a customer must we list both?

Answer:

I understand why you think that this is a Privacy issue, it does seem to fly in the face of Privacy. However, Privacy has an exemption in Section ___.15(a)(4) which states, it is not a problem to release information:

To the extent specifically permitted or required under other provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.), to law enforcement agencies (including a federal functional regulator, the Secretary of the Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 (Financial Recordkeeping), a State insurance authority, with respect to any person domiciled in that insurance authority's State that is engaged in providing insurance, and the Federal Trade Commission), self-regulatory organizations, or for an investigation on a matter related to public safety;

Since this is required by RESPA, it is required under law. Really, this is no different than completing a CTR on someone that makes a large deposit. Although I understand that the Required Provider disclosure goes to s customer rather than the government.

First published on BankersOnline.com 08/16/04