Real Estate Settlement Procedures Act RESPA Flashcards

Real Estate Settlement Procedures Act (RESPA) Flashcards Lender and Broker Charges (7)fees for loan origination, appraisals, credit reports, inspections, mortgage broker services, underwriting and processing Fee Splitting/Kickbackssharing 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.Affiliated Business Arrangement Disclosure must.. (4)describe business arrangement (percentage of ownership of the referring party and service provider), indicate referral may result in financial benefit for referring party, estimate costs that will be charged by the provider, advise borrower that they are not required to use referral.Borrower Credit (Yield Spread Premium)fee paid to the borrower by the lender when a loan is originated at a higher interest rate than the lowest rate for which the borrower qualifies Unilateral Markup (supreme court ruling on fee splitting)occurs when one settlement service provider marks up a fee and pockets the entire overage, is not a violation of

RESPA.

Settlement Cost Booklet (3 things) due three business days after loan app.explains settlement process, tells borrowers that they have right to negotiate terms of loan, review the protections that RESPA creates for borrowers, warns borrowers that use of false info on a loan app can lead to loss of home, poor credit rating, criminal prosecution) Consumer Protections Provided by RESPA after Closingensure borrowers know the amount of funds deposited in escrow, prevent lenders from overcharging borrowers for escrow deposits, borrowers know who is servicing their loans.Good Faith Estimate Charges due at time of closing (5)loan origination, property appraisal, credit reporting, title insurance, recording mortgage, and indirect fees such as borrower credits received by mortgage brokers for benefit of borrowers from lenders Third Party Servicesappraisers, inspectors, credit, reporting agencies, title insurers, and loan processors Affiliated Business Arrangementbusiness relationship and an ownership interest in other settlement service providers Good Faith Estimate is provided by and when... provided by mortgage brokers and lenders at the time of app or mailed within 3 business days after receipt HUD-1 Settlement Statement (due at time of closing, borrower may request copy one business day prior to settlement) Form used for the itemization of actual costs in a transaction that involves a borrower and a seller. HUD-1A settlement statement discloses the cost of settlement in lending transactions, such as refinancing or closings on second mortgages, which do not involve a seller.

Agreement or UnderstandingWritten or verbal agreement or agreement established through a practice, pattern, or course of conduct. Offering things of value in exchange for the referral of settlement business.Exempt loans from RESPA (7)1. loans for 25 acres or more2. loans for business, commercial or agricultural3. temporary financing such as bridge loans4. loans secured by vacant land.5. loan assumptions which are permissible without lender approval6. sale of loan into secondary market7. loan conversions, when a new note is not required and the provisions are consistent with those of original mortgage Government Chargescosts of recording the mortgage transaction in the public land record Interest on a mortgage (when and how is it paid) paid in arrears, after it has had a chance to accrue on the balance.prepaid items and deposits (paid by the borrower at the time of closing) (most common) pro rated real estate taxes, homeowners and flood insurance, private mortgage insurance, interim interest Settlement Servicesservices by providers borrowers depend on to prepare for closing. Includes any service provided in connection with a real estate settlement.Title Chargescosts of title search, title insurance, notary fees. Title insurance insurers extend coverage after researching land record to determine if a piece of real estate is free of encumbrances. (mortgages, liens or other claims) Mortgage Servicing Disclosure statement provided by...lender, mortgage broker that is table-funding loan, or dealer in a first-lien loan for the purchase of manufactured home.Mortgage Servicing Disclosure Statement (due three days after completion of loan app) Only applies to first-lien mortgages. States whether loan servicing can be sold, assigned, or transferred during the life of the loan.Markupsunilateral increase in the cost of a settlement service and retention of the additional fee by the party making the markup Regulation X (section 10) prevents overcharging for escrow payments by requiring annual escrow account analysis, limiting cushion a borrower must maintain to cover escrow disbursements to 1/6 of estimated total annual disbursements, requiring refund of any surpluses over 50$ within 30 days after completion of escrow account analysis.Sham Affiliated Business ArrangementA partnership or joint venture created between settlement service providers for the illegal purpose of splitting fees under the guise of a bona fide affiliated business arrangement RESPA Purposeallow consumers to obtain information on the costs of closing so that they can shop for settlement servicers and protect consumers from excessive settlement costs and unearned fees through mandatory disclosure requirements

and established prohibited practices.RESPAS regulations are known as...Regulation X Initial Escrow Statementmandatory disclosure related to escrow account. lender has 45 days from settlement to deliver

Required Closing Cost disclosures required by RESPA (5)Good Faith Estimate, Settlement Cost Bookelet, Mortgage Servicing Disclosure Statement, Affilliated Business Arrangement Disclosure, HUD-1 Settlement Statement, Federally-related mortgage Loansloans secured by a first or subordinate lien on a residential property which are made with FHA loans, collateral insured by federal government, funds from lender regulated by federal govt, intended for sale to Fannie Mae or Freddie Mac, made by creditor under TILA RESPA applies to..federally-related mortgage loans (virtually every home loan secured by a mortgage) Affiliated Business Arrangement Disclosure (due at time of loan app) disclosure that is made when a settlement service provider refers a loan applicant to an affiliated business for settlement services.Loan App is made up of 6 pieces of information borrowers name, monthly income, social security number, property address, estimated value of property, amount of mortgage loan sought by borrower.