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Unformatted text preview: of real estate transactions. According to the act, the purpose was to affect certain changes in the settlement procedures for residential real estate transactions that will result: In more effective advance disclosure to the homebuyer and seller of settlement costs. 11-18 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 11: FINANCING DISCLOSURE REQUIREMENTS
In the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services. In a reduction in the amounts homebuyers are required to place in escrow accounts. In significant reform and modernization of local record keeping of land title information. In this discussion only some portions of RESPA dealing with the closing of residential transactions will be discussed. APPLICATION
RESPA applies to a federally–related loan secured by a first security interest, on a one– to four–unit residential property. Federally–Related – This term is broad enough to include loans made by any lender insured by FDIC or FSLIC, or approved to make FHA–insured or DVA–guaranteed loans. From this definition, it is obvious that the majority of conventional principal residence loans are covered by RESPA. DISCLOSURE REQUIREMENTS
For any loan transaction covered by the Act, the lender must comply with the following requirements. HUD Brochure – The lender must send a brochure to each loan applicant on receipt of the application. The entire text of the brochure is prescribed by the Secretary of Housing and Urban Development in 12 US Code § 2604. Estimate of Closing Costs – The lender must also provide a good faith estimate of all closing costs, including: All fees charged by the lender, such as: • Loan origination fee Dynasty School (www.dynastySchool.com) 11-19 REAL ESTATE FINANCE
• • Appraisal fee Credit report expenses Closing costs charged by others, such as: • • • Escrow fees Title insurance costs Recording fees SETTLEMENT STATEMENT
The “person conducting the settlement” (usually the escrow holder) must provide to both seller and buyer a completed Uniform Settlement Sta...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10