Mortgage RESPA-Changing

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Mortgage Good New …… taking affect January, 2010……

First best new: RESPA laws and regulations are changing regarding upfront fees and settlement charges. The initial GFE (Good Faith Estimate) distributed by any Loan Officer/Loan Originator/Account Executive etc. in a mortgage transaction becomes the binding GFE. If you don't remember anything else about this article, remember that. The fees that are given to you initially cannot change unless there is an acceptable circumstance for example; something you forgot to tell them and drastic changes occurred. Most fees are subject to a 10% aggregate tolerance. Certain Settlement Cost (Transfer taxes, interest accrual, HOA (home owners insurance, deposits in escrow) have zero tolerance. This list is not conclusive but some of the most important stuff. For those who have applied for a home loan before know that sometimes in the past the fees would change drastically from the initial GFE and the HUD1 settlement statement at closing. Well, it can't happen any longer. Remember, the more you know about the cost of getting a mortgage loan, the better off you are. Don't accept some lame excuse for cost changing, get the facts about the changes and if they are excessive, seek counseling for help.

The RESPA laws are changing and that is definitely good news for all and about time. RESPA (Real Estate Settlement Procedures Act) and is about closing cost and settlement procedures. RESPA is governed and enforced by HUD (US Department of Housing and Urban Development). In other words their laws protect the citizens against unlawful practices that can occur with charging fees at application and at closing of a mortgage loan or any consumer loan as well that are not within certain guidelines. Okay, we all know that we are at this point because there has been some miss leading in the past few years by certain Mortgage Professionals who was in it for the money. Sorry but this is the truth. I know I was there and saw it first hand.

The initial GFE (Good Faith Estimate) is the first document that a mortgage person will give you when you are getting qualified for a mortgage loan or at least it should be. There are (3) forms you should get at initial application and within (3) business days of making application. If you do not have a face to face interview, these forms should be mailed to you within those (3) days and they are: GFE, TIL (Truth-in-Lending disclosure, which spells out the cost of financing the loan over the term and what it will cost you totally) and the Servicing Disclosure. The Servicing Disclosure will tell you if the Lender you are using will transfer the Servicing of the loan to someone else. It will not tell you who at that point but it will tell you if they do or do not service loans.

The structure of the GFE is being changed along with more strict laws regarding the cost of the loan and what they are allowed to charge you and that means a Mortgage Banker, Mortgage Lender, and Mortgage Broker.

I want to mention Attorney Fees also known as Settlement Agent Fee, Closing Agent and Title Company fees. The Lender/Broker does not dictate these fees. You will have Attorney fee for closing the loan, Title Insurance fee, recording fees, transfer tax fees, and they may be listed in one of several ways. Ask for a list of the Attorney fees, do not just let them tell you what the fees are; seek the lowest settlement charges from the Attorney that you can. The law dictates that the Lender/Broker/Mortgage Banker does not receive any kickbacks for using a specific Attorney/Closing Agent. When an Attorney closes a loan for a Lender, these fees are separate from the Lender fees. Yes, they know I advance what the Closing Agent charges and hopefully they are using someone who is consistently fair and you have a choice to use an Agent you prefer. These Agents must be approved with the Lender before they can close the loan. You must have a qualified Closing Agent to search the title so that you have a perfected lien. Normally the Lender prepares the closing documents, note, mortgage, and all disclosures for closing. These documents are already completed and the Attorney (closing agent) goes over them and then explains them to you. The Attorney (closing agent) will obtain the Title Insurance from a reputable Title Company which insures certain things about the property being offered as collateral. The Title Insurance gives you assurance that there are no other liens on the property except for the mortgage loan that is closing. If there was one it will be paid off by your loan.

I hope this give you some insight on the new changes that are taking place that is in your best interest. RESPA is on your side….know what the laws are and you will go away from a loan closing happy.

You may want to read this as well Mortgage Refiance-Home Affordable news.