Closeline Contributes Article On RESPA Regulations to Scotsman Guide

Settling the New RESPA Frontier

The U.S. Department of Housing and Urban Development (HUD) designed its update of the Real Estate Settlement Procedures Act (RESPA) to inform homebuyers of their options, help them shop for the lowest-cost mortgage and avoid harmful loan offers. According to HUD, the update also could save the average homeowner $700.

For the mortgage industry, however, the rules taking effect Jan. 1 have other implications.

The new RESPA regulations will affect the way brokers determine a good-faith estimate (GFE, sctsm.in/HUDGFE) because rough estimates are no longer acceptable. New regulations require that estimates, for the most part, not be higher or lower at the closing table. GFEs previously were only issued after a borrower applied for a loan. Now, they also are required before loan application.

As a result, most borrowers will receive multiple GFEs during the loan process. In addition, a HUD-1 settlement statement must be submitted to the borrower at least 24 hours before closing.

These new regulations potentially could delay closings if the correct paperwork is not prepared in advance. Thus, the time is now for mortgage professionals to start researching title companies and their settlement systems.

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For the four things that Closeline recommends when analyzing a settlement partner, please visit the full article at the Scotsman Guide's website.

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