Real Estate Settlement Procedures Act
Protecting Your Interests During Closing
The Real Estate Settlement Procedures Act (RESPA) concerns closing costs and settlement procedures. RESPA requires that consumers receive disclosures during the transaction, and outlaws kickbacks that increase the cost of settlement services. RESPA is designed to help homebuyers, and effective July 21, 2011, is administered and enforced by the Consumer Financial Protection Bureau (CFPB). The Rowe Law Firm provides legal representation and advice regarding RESPA matters to people in the Baton Rouge, Louisiana, area.
RESPA requires that borrowers receive disclosures at various times during the real estate settlement process. These include:
- When applying for a mortgage loan, lenders must give the borrowers a special information booklet that contains consumer information regarding various real estate settlement services. They must provide a good faith estimate of settlement costs that lists the charges the buyer is likely going to have to pay at settlement. If a lender requires use of a particular settlement provider, the lender must disclose this requirement. Last, the lender must provide a mortgage servicing disclosure statement that discloses to the borrower whether the lender intends to service the loan themselves or transfer it to another lender. If the borrowers do not get these documents at the time of application, then the lender must mail them within three business days of receiving the loan application.
- An affiliated business arrangement disclosure is required whenever a settlement service provider involved in a RESPA-covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest. This disclosure must be made at or prior to the time of referral and must describe the business agreement that exists and give the borrower an estimate of the provider’s charges.
- The borrower has a right to see the HUD-1 settlement statement one day prior to the actual settlement. The HUD-1 settlement statement is a standard form that shows all charges imposed on borrowers and sellers in connection with the settlement. The settlement agent must then provide the borrowers with a completed HUD-1 settlement statement based on information known to the agent at that time.
- An initial escrow statement that itemizes the estimated taxes, insurance premiums and other anticipated charges from the escrow account during the first 12 months of the loan must be delivered 45 days from settlement.
- Loan providers must deliver an annual escrow statement once a year to borrowers.
- If the loan provider sells or assigns the servicing rights to a loan to another loan provider, they must provide a servicing transfer statement.
Dedicated And Effective Real Estate Attorneys
If you need legal representation for your residential or commercial real estate transaction, please contact the Rowe Law Firm by phone at 225-250-1161 or toll free at 877- 335-7910 to find out how we can help you.