A Complete Guide to RESPA

With the ever-present fluctuations in the housing market, it’s important for consumers to be protected. This is precisely why the Federal Government enacted the Real Estate Settlement Procedures Act, more commonly known as RESPA. The enforcement of this legislation is administered by the Consumer Financial Protection Bureau (CFPB).

RESPA ensures that U.S. consumers receive access to the necessary financial information pertaining to mortgage costs. The most recent version of RESPA clarifies mortgage financing for consumers, making it easier to perform a free market search among settlement service providers. The Good Faith Estimate (GFE) is the standardized document that displays all financial information associated with a mortgage transaction, and is the primary instrument that allows for a straightforward comparison process between mortgage providers.

Itemized below are four of the primary consumer protection requirements under RESPA:

1.    The Good Faith Estimate (GFE) must be supplied to consumers during the mortgage loan application process.

2.    RESPA provides for tolerance levels for closing costs that help keep costs in line and prevent last minute surprises for the borrower.

3.    During any residential mortgage loan closing, a HUD Uniform Settlement Statement must be completed with its fees coming from the GFE.

4.    RESPA prohibits unearned fees. For example, if a lender receives a fee for referring an appraiser, it is known as a kickback, which is illegal.

PREPARE FOR CHANGES

In the vein of understanding current rules and regulations, we are on the verge of welcoming a new set of industry changes. On August 1, 2015, the TILA-RESPA rule takes effect. Regardless of whether an application has been received, on August 1, the restrictions go into immediate effect and the use of the GFE, HUD-1, and Truth-in-Lending forms will become obsolete for most mortgage loans.

For more information on the TILA-RESPA rule, please visit cfpb.gov. At Marina Title, we apply our experience and professional expertise to provide our clients with a flawless transaction process. Whether you are a homebuyer or home seller, Realtor or lender, it is our goal to close your transaction quickly and efficiently. Call us at (305) 901-5628 or email us at [email protected]. to learn more about RESPA and the upcoming changes today.