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RESPA Disclosures
RESPA disclosures are put
in place to aid consumers become more astute shoppers for settlement services
by requiring that lenders provide certain disclosures to the borrower during
the course of their loan. Mandated by
RESPA (Real Estate Settlement Procedures Act), RESPA disclosures allow the
borrower to examine costs that are associated with the settlement
procedure. This allows the borrower to
accurately track through the costs associated with a home transaction.
Some examples of RESPA
disclosures include the Good Faith Estimate of Settlement Costs. This
disclosure occurs during the application of a loan process and requires that
your loan source provide you with a Good Faith Estimate of the settlement
service charges attached to the settlement service. This disclosure should be provided to you within three days of
loan application and although the amount listed are close estimates, the amount
of charges listed often vary from the actual service charges. Usually, changing market conditions alter
the service charges. However, it is
important that you retain this document, as you will be able to question your
lender about the cost changes.
Other examples of RESPA
disclosures include: the Servicing Disclosure Statement, which occurs within three days of a loan
application and details whether your loan source expects that someone else will
be servicing your loan; Affiliated Business Arrangements, which are documents stating that you are not
required to use the affiliate of a loan source that you had applied to; and HUD-1
Settlement Statement, which is a statement
that you are allowed to examine one business day before the settlement that
details the services provided to you as well as its charges.
Another RESPA disclosure
is the Escrow Account Operation & Disclosures, which is used in instances where your loan source has insisted that
you establish an escrow account to insure that your taxes and insurance
premiums are paid on a timely basis. This document is given to you within 45
days of the settlement and is a statement that details all of the payments that
are to be deposited into the escrow account and how this money will be
disbursed in the year ahead.
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