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RESPA requires borrowers to receive information at various points in the transaction process.
Some of the information indicates settlement costs, describes how creditors and trust accounts are handled, and describes the business relationship between clearing service providers.
Specifically, when a borrower applies for a loan, HUD mortgage brokers and/or lenders:
- Provide borrowers with a special information booklet containing consumer information about various property settlement services. (for sale only).
- The actual GFE estimate indicates the cost the buyer may incur as a result of the trade. The actual costs may differ as these is just an estimate and not the final numbers. If the lender requires the borrower to use a specific payment service provider, the lender must disclose this request on the GFE.
- The borrower’s mortgage statement indicates whether the lender intends to extend the loan or transfer it to another lender. It also contains information on how to resolve complaints. If the lender does not submit these documents to the borrower when the borrower submits a loan application, the lender must send these documents to the borrower within three working days after receiving the loan application.
Any fees imposed on the debtor and the seller in connection with the foreclosure of the property must be disclosed on the HUD-1 payment report and notified to the buyer on or the day before closing. Complete the transaction.
The HUD-1 also allows you to adjust or offset the costs you pay for the property over time, such as water bills, taxes, homeowner association fees, condo fees, and other assessments.
All closing costs are displayed in this app to determine the total amount the buyer will pay for the property and the total amount the seller receives.
Disclosures Before Closing
RESPA requires consumers to disclose all applicable commercial agreements (AfBAs).
The AfBA is an agreement whereby persons capable of dealing in real estate take over the clearing house and determine or influence the choice of the clearing house sends to.
Referring parties must disclose AfBA information to consumers before or during the referral.
The information should describe cooperative agreements between suppliers and provide borrowers with cost estimates for other suppliers.
Lenders cannot request referrals to specific service providers unless the borrower has referred the borrower to an attorney, credit reporting agency, or appraiser representing the lender in the transaction.
Disclosures At Closing
The initial escrow report provides an estimate of the taxes, premiums, and other fees due from the escrow account for the first twelve months of the loan.
Enter the deposit amount and required safety cushions. The borrower must also submit an annual trust report.
Disclosures Post Closing
In addition to the annual warranty report, RESPA also requires the consumer to receive a delivery deed if the lender sells or transfers the debtor’s servicing rights to another lender.
The credit provider must notify the borrower about this 15 days before the day the credit transfer takes effect.
The notice must include the new service provider’s name, address, toll-free telephone number, and the date the new service provider begins accepting payments.
Reference Source: RESPA News
