North Carolina RESPA Compliance Lawyers

The Real Estate Settlement Procedures Act (RESPA) has recently undergone significant changes that impact all residential loan closings. An experienced real estate attorney can help you understand the changes, and help ensure that your loan is in compliance with the new requirements.

Contact the real estate lawyers at Bagwell Holt Smith Jones & Crowson, P.A., for more information about how changes to RESPA laws may affect you.

What Is RESPA?

RESPA is a federal consumer protection act that protects individuals nationwide and is enforced by HUD. It was originally enacted in 1974. This act required disclosure and clarification of loan terms and settlement charges for consumers shopping among lenders and other settlement service providers. The goal of the Act was to enable consumers do better comparison shopping because they have all the costs upfront.

The Act also made illegal any kickbacks and referral fees between service providers, because such practices increased the costs to the consumer for settlement services. Practices that were outlawed might include requiring that home buyers purchase title insurance from a specific company or sharing a fee with a referral source.

RESPA covers many different types of residential loans including most purchase loans, assumptions, refinances, property improvement loans, reverse mortgages and equity lines of credit.

What you need to know about RESPA

On January 1, 2010, major changes to RESPA regulations took effect. These changes increased and standardized the disclosure responsibilities of lenders on what is called the Good Faith Estimate (GFE) form. This form:

• Clearly discloses key loan terms and closing costs
• Provides consumers a clear summary of mortgage loan terms and settlement charges
• Ensures that consumers are aware of total costs of settlement transactions
• Improves disclosure of rebates that may be paid from lenders to mortgage brokers

RESPA has always required lenders to provide Good Faith Estimates of settlement costs. The new regulations require heightened transparency in the disclosure process and create an enforcement mechanism to compare the early disclosed fees with the actual fees at closing. This is done by including specific comparisons in an expanded HUD-1 Settlement Statement provided at closing. If the relationship between the estimated and actual fees is not within the required tolerance levels established by RESPA, there is a non-compliance which must be corrected before the loan can close.