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New RESPA Rules: What Lenders Need To Know
On January 1, 2010, recent changes in the Real Estate Settlement Procedures Act (RESPA) came into force for all "loan originators" - lenders and mortgage brokers - the manipulation by the federal government for residential loans . RESPA revisions are intended to provide consumers a way to better understand the terms of the obligations of your loan. The responsibility for ensuring compliance with these regulations, however, falls squarely on the lenders.
The good faith estimate (GFE)
One of the main changes in the new RESPA rules is a requirement that lenders with potential borrowers with a greater depth, to estimate a good faith standard. Lenders are not allowed to make changes to any of the languages ??in the form or add additional pages or addenda. If the loan requires a payment period once a month, then the lender to convert the loan into one monthly payment for the use of form.
If the borrower has two mortgages on one property, a GFE must be completed for each loan.
While a mortgage broker can provide the borrower with a copy of the GFE within three working days, the ultimate responsibility to ensure that the borrower has received a copy within the prescribed period falls on the lender.
HUD-1 Settlement Statement (HUD-1)
The HUD-1 settlement statement to the borrower is given by the liquidator at the end of the loan. The module contains the actual charges and adjustments to pay the borrower and the seller. (If not owned by the seller, then the settlement agent should complete the form HUD-1A).
Diagram is included in the HUD-1, which compares the total cost of a real estimate of closing costs provided GFE. If any of the actual costs exceed the estimates of the GFE above the tolerance level specified, the lender is prohibited from collecting the excess from the borrower.
The HUD-1 form must also include a final summary of the main conditions for the loan. The lender must provide this information to the settlement agent in a format that allows the agent to fill in the blanks on the HUD-1 without having to refer to the actual loan documents.
Like the GFE or the lender or settlement agent can change the language included in the standard HUD-1. The borrower must have a copy of the completed and signed before leaving the fence.
Tolerances
Under the new rules, certain expenses discovered that appear on the GFE can not change or may not change over a certain level of tolerance of the actual amount that is listed on the HUD-1.
Zero tolerance: