Real Estate Settlement Procedures Act (RESPA)

Sam

RESPA (Real Estate Settlement Procedures Act) is a consumer protection statute passed in 1974 and its main purpose is to help you get equipped with the settlement services. In addition, it also aims to reduce unnecessary costs included in the settlement cost of the loan.

Section 8 of RESPA Statute prohibits consumers from paying a fee or anything of value in exchange for referrals of settlement services involved in mortgage loan.

Section 9 of RESPA states that a seller should not ask a buyer to use a title insurance company, either directly or indirectly, as a condition of sale.

Section 10 of RESPA sets limits on the amounts that a lender may require a borrower to deposit into an escrow account for the purposes of paying taxes, hazard insurance and other fees related to the property.

RESPA gives the buyer a right to receive disclosures which speak out clearly about the costs associated with the settlement. Mortgage broker/lender must provide you with:

An Information booklet - Consists of consumer information regarding different real estate settlement services.
A Good Faith Estimate (GFE) - Gives an estimate of the settlement costs that a borrower needs to pay.
Mortgage Servicing Disclosure Statement - It informs the borrowers as to whether the lender will service the loan or transfer it to another lender.
Disclosure for escrow Account - This statement states how your escrow account will be managed by the lender or whether he will hand over the charge to someone else.

Guest 0.10 Dollars($)

what are the RESPA required disclosures after settlement/closing

colin · Posted: Wed Dec 20, 2006 3:11 pm Post subject:

Hi Rattr,

Welcome to MortgageFit forum.

As per RESPA, after settlement your loan servicer is required to provide you with Annual Escrow Statement once every year.

This statement would summarize the deposits you had made to the account and the payments out of it. This statement will also provide you information on the balance position of the account at the end of the year.

In addition to the Annual Escrow Statement, the loan servicer will have to provide you with a Servicing Transfer Statement if he sells your loan to another servicer or transfers the servicing rights of your loan to any other loan servicer.

Colin

jameshogg · Posted: Wed Dec 20, 2006 9:45 pm Post subject: RE: disclosures under RESPA

Hi Rattr,

Under the RESPA Act, lenders should provide borrowers with disclosures during the course of getting a mortgage loan. Some disclosures reveal the closing costs while others give an idea about the escrow account practices. Besides, there is another disclosure which describes the business relationship between professionals involved in conducting the loan closing.

Thanks,
James.

Samantha

Hi Rattr,

The very first disclosure is the Good Faith Estimate which provides an estimated value of the costs the borrower is likely to pay in closing. You will be getting the disclosure either when you apply for a loan or within 3 business days of the application.

Another disclosure is the Servicing Disclosure Statement or the Servicing Transfer Statement. This implies that some other lender or servicer will be collecting monthly payments instead of your lender himself.

Under the RESPA, a borrower will also get an Affiliated Business Arrangement Disclosure if the lender, broker or other party in closing refers him to their affiliates for settlement service. This form will ensure that you need not use the services of the affiliate and can very well shop for other lenders.

Hope this information will help you.

God bless you

Samantha

Guest 0.10 Dollars($)

I would like to know if someone violates Section 8 of RESPA, what penalties are possible for such violation.

blue · Posted: Sat Jan 13, 2007 11:00 am Post subject:

Hi Drantch,

Welcome to Mortgagefit discussion board.

There are criminal and civil penalties which can be imposed if someone violates Section 8 provisions of RESPA.

A fine of up to $10,000 and 1 year imprisonment is possible if a criminal case is filed against a person.

In case a private law suit is started then the person who has violated the Section 8 provisions would be liable to pay 3 times the amount paid for the service to the person who was charged such an amount for the settlement service.

For example, Kary was charged $700 for settlement service by Linda. If a private law suit is started by Kary as per Section 8 of RESPA, then Linda may have pay Kary $2100, three times of what she charged from Kary.

Please let me know if you have any other questions.

Thanks
Blue

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