Jan 13 2010
Changes In RESPA That Will Affect Your Mortgage Applications. What You Need To Know!
The Real Estate Settlement Procedures Act (RESPA) was enacted in 1974 to provide consumers with improved disclosure of mortgage settlement costs and to reduce the costs of closing by eliminating referral fees and kickbacks. Through the years, the Department of Housing and Urban Development (HUD) has issued regulations and policy statements to provide RESPA guidance to the mortgage industry and consumers alike.
On November 17, 2008, HUD published a new final rule “To Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs.” The rule mandates use of a new Good Faith Estimate (GFE) and HUD-1 which went into effect on January 1, 2010.
Below are just a few of the changes associated with the new RESPA guidelines that became effective January 1st, 2010.
- Lenders can collect no fees other than the credit report fee until the Truth In Lending (TIL) has been delivered to the borrower. If it has been delivered by mail, they must wait 3 business days to collect any fees. Appraisal fees cannot be collected in advance, so you must allow time when applying for a mortgage to receive these documents and for the appraisal to be ordered.
- The buyer must receive the Good Faith Estimate (GFE) and the Truth in Lending (TIL) which must disclose the final Annual Percentage Rate (APR) at least 7 days prior to closing.
- If the final Annual Percentage Rate (APR) deviates from the initial Good Faith Estimate (GFE) by more than .125%, the Truth In Lending (TIL) must be re-disclosed and the 3 business day waiting period starts over. Changes to the terms of the loan such as rate, or closing costs, etc require a re-issue the Good Faith Estimate (GFE) and the buyer must take 3 business days to review the new GFE. So if for some reason there was a change at the closing table, the closing would be automatically pushed back 3 days.
These are just a few of the changes. Today, selecting the right loan officer can mean the difference between your moving into your new home or having your furniture stuck in the back of a moving truck for 3 days in a hotel parking lot. The important thing for home buyers to remember that time is of the essence and that the most accurate Good Faith Estimate is the best estimate. Charlotte offers lots of great mortgage loan options and loan professionals. If you need a referral, don’t hesitate to contact Carolinas Realty Partners at 704-779-0813.
To view the new Good Faith Estimate form which all lenders are required to use, click here. To view a copy of the new HUD-1/Settlement Form, click here.
To review HUD’s 48 page “Shopping For Your Home Loan” booklet, click here.
7 Responses to “Changes In RESPA That Will Affect Your Mortgage Applications. What You Need To Know!”
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