Real Estate Settlement Procedures Act RESPA, Regulation X

Real Estate Settlement Procedures Act (RESPA, Regulation X) Flashcards RESPA origins and purpose1974To allow consumers:-to obtain information on the cost of closing services-protect consumes from excessive settlement costs and unearned fees.Only fees for services performed andNo Unearned fees or Fee splitting (kickbacks) Overview of the foreclosure processLoss Mitigation - live contact with delinquent borrower 36th day, written notice 45th day. 90-120 to begin foreclosure with statement urging borrower to contact lender. Loss Mitigation might ad a modification by adding owed amount to the back of the loan.Types of loans to which RESPA is applicable RESPA applies to "federally-related mortgage loans," which are defined as loans secured by a first or

subordinate lien on residential property which are:Made

with funds insured by the federal government (e.g., FHA loans)Made with collateral insured by the federal government (e.g., flood insurance)Made with funds from a lender regulated by the federal government or that has deposits insured by the federal government (e.g., depository institutions regulated by the FDIC or NCUA)Intended for sale to Fannie Mae or Freddie MacMade by a creditor regulated under the Truth-in-Lending Act, orMade by a mortgage broker and assigned to a creditor, if the broker or creditor is federally-related Initial EscrowDisclosure typically given at settlement, but lender has 45 days from settlement to deliver it. The statement must

include:- Amount of mtg. payment and the portion

deposited into the escrow account.-Itemized taxes and insurance to be made from escrow.-Amount servicer has selected as a cushion-Projected balance vs. your actual balance-If service is transferred it is 60 days to send out NEW initial escrow statements.Required borrower information on application (Reg X)ALIENS: Address, Loan amount, Income, Estimated property value, Name, Social Security. HUMDA reportable application.Knowledge of the prohibitions, limitations and exemptions set by RESPA

Exemptions: Loans for business, commercial, or

agricultural purposes, temporary financing, loans secured by vacant land, loan assumptions which are permissible without lender approval, Loan conversion, Transactions between lenders and investors for the sale of a closed loan.

Prohibitions: kickbacks, settlement statement Criminal 10K

or 1 year in jail Class Action $1M or 1% net worth the lesser of the two Mortgage BrokerA person who brings together the user of capital (borrower) and the supplier of capital (lender). For this service, a finder's fee is usually paid by the borrower.

Settlement ServicesA service that brings us to loan settlement: mortgage

brokers, real estate brokers, attorneys, inspectors, credit reporting agencies, notaries, title insurers.