examinations, the provision of title certificates, title

Real Estate Settlement Procedures Act Flashcards Settlement ServicesSettlement services include any service provided in connection with a real estate settlement. title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals,services rendered by a real estate agent or broker, the origination of a federally related mortgage loan, and thehandling of the processing, and closing or settlement.HUD-1A Settlement StatementIs the version of the HUD-1 Settlement Statement used when there is no seller involved in the real estate transaction, such as with a refinance. Due at the time of closing, but the borrower may request a copy one business day prior to settlement Title Changes on GFE Includecost of title searchtitle insurance preiumsnotary fees Settlement Cost Information Bookletdue three business days after completion of a loanapplication. Reviews the protections that RESPA creates for borrowers Warns borrowers that use of false information on a loan application can lead to loss of their home, a poor credit rating, and even criminal prosecution for fraud. For new home purchases RESPA Exempt LoansLoans for 25 acres or moreLoans for business, commercial, or agricultural purposesTemporary financing, such as bridge loansLoans secured by vacant land.Section 8b RESPAThe Supreme Court in February 2012, confirmed that fee-splitting is prohibited only if the fee is actually split.MarkupsViolation of RESPAoccur when one settlement service provider increases the charges of another settlement service provider and retains the additional fees. The Supreme Court in February 2012, confirmed that fee-splitting is prohibited only if the fee is actually split.Where is a borrowers credit discloosedGFE and HUD - 1 Sham Affiliated Business ArrangementA partnership created between settlement service providers for the illegal purpose of splitting fees under the guise of a bona fide affiliated business arrangement. mortgage professionals should continue to rely on exiting HUD policy statements to evaluate compliance with RESPA limitations on affiliated business arrangements until CFPB takes further action.Fees found on the GFE can be consolidated into four key areas lender and broker charges, title charges, government charges, and prepaid items and deposits.

Pre paid items on GFE includeClosing Cost Feespro rated realestate taxeshomeowners insurance premiumsFlood insurance premiumsinterim interest Violations of Section 8 Penaltiessubject to RESPA's most severe penalties including fines of up to $10,000 and one year in prison.Fee splitting is illegal whenone or both of the service providers fail to preform enough work to earn the fee Government Charges on GFECharges to record the mortgageTransfer taxOther charges established by the state or municipality Page two of HUD's 2010 version of the GFE includesa block of information on "Understanding Your Estimated Settlement Charges." This block of information contains 3 options for selecting an interest rate and covering settlement costs. Referred to now as "borrower credits," YSPs are disclosed in this section. When a borrower credit is involved in a transaction, mortgage brokers must disclose to the borrower that they will "...receive a credit of $_____ for this interest rate of _____%..." stating that, "This credit reduces your settlement charges." This disclosure is intended to ensure that borrowers understand that they have accepted a higher interest rate in order to reduce or cover their settlement charges.Requirments for Settlement Cost Information Bookletonly one copy is requiredcan be reproduced in any formcan be taranslated into other languagesCan be stamped w mortgage prof. nameCan not be made part of of other larger docs Prohibition against steeringLoan originators may not steer a borrower toward a particular loan product in order to increase the amount of compensation they may earn. They must offer a borrower multiple loan options from a number of creditors with whom the loan originator regularly does business.Prohibition against double compensationif the borrower pays a fee to the loan originator for loan origination services, the loan originator is prohibited from accepting additional compensation from anyone else in connection with the loan transaction.Who regulates RESPACFPBConsumer Financial Protection Bureau Section 6Ensure that borrowers have adequate notice when their loan servicing is transferred to another institution RESPA Applies toFederally regualted loansVirtually all residential mortgages secured by real property.Affiliated Business DisclosureIf a settlement service provider refers a loan applicant to an affiliated business for settlement services,They must disclose the affiliated business arrangement at the time of making the referral. Advise the borrower that they are not required to use the service provider that they were referred to

Section 8 RESPAThe sharing of fees among settlement service providers.No person shall give or accept any split, or percentage of any charge other than for services actually performed.Record Retention Requirements for RESPA DisclosuresRESPA imposes a five-year record retention requirementMortgage Servicing Disclosure StatementHUD-1 or HUD-1A Settlement StatementAffiliated Business Arrangement Disclosures GFE margin of errorAt the time of settlement, the total charges cannot exceed the estimated costs listed on the GFE by more than 10% RESPA purposeReal Estate Settlement Procedures Act Regulation X 1974Allows consumers to obtain information on the costs of closing so that they can shop for settlement services.Section 10 RESPAprotects consumers by ensuring that borrowers know the amount of funds deposited in escrow accounts and by preventing lenders from overcharging borrowers for escrow deposits.Good Faith Estimate (Regulation X)Due at the time of application or mail it within three business days after receipt of a loan application. Outlines a reasonable estimate of the costs and fees associated with the loan. Fees found on the GFE can be consolidated into

five key areas: lender and broker charges, title charges,

government charges, and prepaid items and deposits and closing costs.Violations of Section 6 Penaltiesthe loan servicer can be liable for penalties of up to $1,000.In class actions, damages may not exceed $1,000 for each member of the class, and total damages may not exceed $500,000 or 1% of the net worth of the servicer.Mortgage Servicing Disclosure ActDisclouser to loan applicant if servicing may be sold during the term of the loan. it applies to first lien mortgages only and must be provided within 3 business days of application HUD-1 Settlement Statementthe form used for the itemization of actual costs in a transaction that involves a borrower and a seller. Due at the time of closing, but the borrower may request a copy one business day prior to settlement Closing Cost Disclosures Required By RESPA Good Faith Estimate, Lender and Broker Charges, Title Charges, Government Charges, Prepaid Items and Deposits, Annual Escrow StatementRequired by RESPA, this disclosure on the amounts needed to cover escrow disbursements is due annually Affiliated Business ArrangementA person who is in a position to refer business to a real estate settlement service involving a federally related mortgage loan. Or a direct or beneficial ownership interest of more than 1% in a provider of settlement services; and either person directly or indirectly refers business to each other or influences the selection of that provider.

When is GFE ProvidedWithin 3 days following loan application. If application is done face to face it is due at time of application.RESPA DisclosuresMortgage Servicing Disclosure StatementHUD-1 or HUD-1A Settlement StatementAffiliated Business Arrangement Disclosures Violations of Section 10 Penaltiescan result in a civil penalty of $75, with a limitation of $130,000 on the penalty imposed on one servicer for violations occurring within a consecutive 12-month period.However, if a loan servicer intentionally disregards the requirements of Section 10, penalties are $110 for each violation, with no limit on the total amount of the penalty.Servicing Transfer StatementAt least 15 days prior to the transfer. The new loan servicer must also provide notice within 15 days after the transfer has occurred. No no payments for 60 days after transfer has occurred Borrower Creditan amount paid by the lender to a third party originator for locking a borrower's interest rate at a rate higher then prime. Subsidizing closing costs for a borrower in exchange for taking a higher rate. Must be disclosed on GFE and HUD 1 The Initial Escrow StatementRequired by RESPA and due 45 days after closing, this disclosure is often provided at the time of closing. The initial escrow statement provides an estimate of escrow payments (taxes, insurance, etc.) that will be required in the first 12 months of the loan.Changed CircumstancesInaccurate GFE, Acts of God war, disaster, or other emergency, boundary disputes, the need for flood insurance, or environmental problems. Revised GFE must be issued within three business days of the loan originator becoming aware of changed circumstances RESPA CoversMost realestate transactions and both first and subordinate liens Loans Covered By RESPAHome purchase loans, refinances, lender-approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.