Real Estate Settlement Procedures Act Questions And Answers Latest Updates
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Course
Real Estate Settlement Procedures Act
Institution
Real Estate Settlement Procedures Act
RESPA Exempt Loans - ️️Loans for 25 acres or more
Loans for business, commercial, or agricultural purposes
Temporary financing, such as bridge loans
Loans secured by vacant land.
Section 8 RESPA - ️️The sharing of fees among settlement service providers. No
person shall give or accept ...
Real Estate Settlement Procedures Act
RESPA Exempt Loans - ✔️✔️Loans for 25 acres or more
Loans for business, commercial, or agricultural purposes
Temporary financing, such as bridge loans
Loans secured by vacant land.
Section 8 RESPA - ✔️✔️The sharing of fees among settlement service providers. No
person shall give or accept any split, or percentage of any charge other than for
services actually performed.
RESPA Covers - ✔️✔️Most realestate transactions and both first and subordinate liens
Who regulates RESPA - ✔️✔️CFPB
Consumer Financial Protection Bureau
RESPA Applies to - ✔️✔️Federally regualted loans
Virtually all residential mortgages secured by real property.
Loans Covered By RESPA - ✔️✔️Home purchase loans, refinances, lender-approved
assumptions, property improvement loans, equity lines of credit, and reverse
mortgages.
Section 10 RESPA - ✔️✔️protects consumers by ensuring that borrowers know the
amount of funds deposited in escrow accounts and by preventing lenders from
overcharging borrowers for escrow deposits.
Violations of Section 10 Penalties - ✔️✔️can result in a civil penalty of $75, with a
limitation of $130,000 on the penalty imposed on one servicer for violations occurring
within a consecutive 12-month period. However, if a loan servicer intentionally
disregards the requirements of Section 10, penalties are $110 for each violation, with no
limit on the total amount of the penalty.
The Initial Escrow Statement - ✔️✔️Required by RESPA and due 45 days after
closing, this disclosure is often provided at the time of closing. The initial escrow
statement provides an estimate of escrow payments (taxes, insurance, etc.) that will be
required in the first 12 months of the loan.
Annual Escrow Statement - ✔️✔️Required by RESPA, this disclosure on the amounts
needed to cover escrow disbursements is due annually
, Section 6 - ✔️✔️Ensure that borrowers have adequate notice when their loan servicing
is transferred to another institution
Violations of Section 6 Penalties - ✔️✔️the loan servicer can be liable for penalties of
up to $1,000. In class actions, damages may not exceed $1,000 for each member of the
class, and total damages may not exceed $500,000 or 1% of the net worth of the
servicer.
RESPA purpose - ✔️✔️Real Estate Settlement Procedures Act Regulation X 1974
Allows consumers to obtain information on the costs of closing so that they can shop for
settlement services.
Servicing Transfer Statement - ✔️✔️At least 15 days prior to the transfer. The new loan
servicer must also provide notice within 15 days after the transfer has occurred. No no
payments for 60 days after transfer has occurred
Section 8b RESPA - ✔️✔️The Supreme Court in February 2012, confirmed that fee-
splitting is prohibited only if the fee is actually split.
Fee splitting is illegal when - ✔️✔️one or both of the service providers fail to preform
enough work to earn the fee
Violations of Section 8 Penalties - ✔️✔️subject to RESPA's most severe penalties
including fines of up to $10,000 and one year in prison.
Settlement Services - ✔️✔️Settlement services include any service provided in
connection with a real estate settlement. title searches, title examinations, the provision
of title certificates, title insurance, services rendered by an attorney, the preparation of
documents, property surveys, the rendering of credit reports or appraisals,services
rendered by a real estate agent or broker, the origination of a federally related mortgage
loan, and thehandling of the processing, and closing or settlement.
Markups - ✔️✔️Violation of RESPA
occur when one settlement service provider increases the charges of another
settlement service provider and retains the additional fees. The Supreme Court in
February 2012, confirmed that fee-splitting is prohibited only if the fee is actually split.
Affiliated Business Arrangement - ✔️✔️A person who is in a position to refer business
to a real estate settlement service involving a federally related mortgage loan. Or a
direct or beneficial ownership interest of more than 1% in a provider of settlement
services; and either person directly or indirectly refers business to each other or
influences the selection of that provider.
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