RESPA


Top News

More move, but not long distance- USA Today – – More Americans moved last year than in the previous year, but most didn’t go far, a sign that foreclosures and housing costs are still keeping people close to home.

States: Let taxpayers cover your mortgage – CNN Money – – NEW YORK (CNNMoney.com) — Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage

Market News

Mortgage rates hit lowest levels of the year – MarketWatch – – Mortgage rates fell to their lowest levels of the year, and rates on 5-year adjustable-rate mortgages hit a record low, according to Freddie Mac’s weekly survey of conforming mortgage rates, released on Thursday

5/12/2010 Refinance Applications Surge, Purchase Applications Drop in Latest MBA Weekly Survey »
Mortgage Bankers Association – – Welcome to MBA. The Refinance Index increased 14.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 9.5 percent from one week earlier. 

Home prices fall, but key markets improve – Bankrate.com – – Nationwide home prices were down slightly in the first quarter when compared to the same time last year, according to the National Association of Realtors’ latest quarterly survey. 

Home foreclosure rate posts first annual decline in five years – USA Today – – Foreclosure filings dropped 2% in April from a year ago, the first annual decrease in more than five years, according to a report out Thursday. HOME PRICES: May drop as tax credit expires CHARTS: Housing market’s rise, fall and rebound 

Maryland Governor Signs Power of Sale Law – DSNews.com – – Maryland Gov. Martin O’Malley has signed a new law establishing that a power of sale is valid in existing and future deeds of trust originally granted to a corporate trustee. 

Technology News

Google and Verizon building iPad competitor – Fortune – – McAdam, in an , said that tablets are part of the “next big wave of opportunities,” and that “work on a tablet is part of a deepening relationship between the largest U.S. wireless carrier and Google

Other News

Game Changing Ideas Help Realtors® Respond to Challenging Real Estate Market – REALTOR Magazine – – The National Association of Realtors® has selected 14 winning ideas from its “Game Changers Challenge” to create innovative programs that help Realtor® associations and their members respond to and excel in today’s challenging real estate

Green practices conflict with homeowners association rules – USA Today – – Early last year, Larry Lohrman, a homeowner in Salem, Ore., decided to try to cut his energy consumption by installing solar panels on his roof. He researched the panels, hired an installer and put a down payment on a 3,000-watt solar installation 

Recovery Requires Reshaping the Real Estate Industry, Say Realtors® – REALTOR Magazine – – While the fragile housing market has begun to stabilize, the economy and real estate industry still face many challenges on the way to a full 

QUIZ: RESPA
  The Real Estate Settlement Procedures Act (RESPA) is a consumer disclosure and anti-kickback statute designed to inform consumers of their settlement costs and to prohibit kickbacks that can increase the cost of obtaining a mortgage. Take this quiz to find out how well you know about this important issue to stay on the right side of the law.
1. Which of the following is NOT a settlement service that is covered by RESPA?
Mortgage loan origination
Furniture moving
Real estate brokerage services
Lender’s credit report
   

2. Under RESPA, a real estate professional may give in return for the referral of real estate settlement service business:
A thank you
A thing of value
A kickback
A fee
   

3. To provide consumers with cost information about the mortgage process, RESPA created the good faith estimate (GFE) and the HUD-1 closing document. RESPA requires that the HUD-1 form be provided to the:
Tax assessor
Next-door neighbor
Real estate salesperson
Buyer
   

4. Substantially revised versions of the GFE and HUD-1 took effect at the beginning of 2010. Among other things, HUD’s goal was to reduce surprises to consumers at the closing table by restricting how much some costs could change between the GFE and the HUD-1. What is included among the costs that are allowed to change?
Loan origination fee
Title insurance
Transfer taxes
Credit charges such as points
   

5. In addition to reducing consumer surprises at the closing table, the revised GFE and HUD-1 are intended to make comparison shopping easier for consumers. To do that, the GFE lets consumers look at a proposed loan under all but one of these different scenarios:
The loan as proposed
The loan with a lower interest rate
The loan with different underwriting terms
The loan with lower settlement charges
   

6. To combat higher costs in real estate transactions, Section 8 of RESPA makes it a criminal act for settlement service providers to pay fees for the referral of business. One exception to this rule allows a real estate professional to pay a referral fee to:
A mortgage broker who refers a buyer who has been pre-approved
A previous customer who refers a neighbor
Another licensed real estate broker who refers a buyer from another part of the country
A relative who overhears a customer saying he or she is moving
   

7 . Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
Filling out a mortgage application
Telling the home inspector the address of the property to be inspected
The reasonable value of goods and services actually provided or performed
Doing the same thing they have been paid to do as a real estate professional
   

8 . RESPA allows title companies to provide real estate professionals:
$50 for every client referred to the title company by the real estate professional
An entry in a contest to win a car for every $1,000 in premiums paid by the real estate professional’s clients
Tickets to a baseball game once a week for the entire season
Notepads that have been imprinted with the title company’s name and phone number
   

9 . Two companies that provide settlement services and have some degree of common ownership are considered affiliated businesses under RESPA. When there is a referral from one of these companies to the other, RESPA requires the customer receive an affiliated business disclosure that contains specific information, including:
A statement that use of referred service is not required
Names of other providers of the same service
A statement that the property is pest-free
The commission being paid by the property seller
   

10. The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
The real estate professional making the referral to receive a small referral fee
The party making the referral to receive a return on its ownership interest in the company receiving the referral
The buyer to avoid having to pay real property transfer tax
The seller to require buyers to use the seller’s attorney
   

11. RESPA is interpreted and enforced by the:
U.S. Department of Justice
Local U.S. Attorney
U.S. Department of Housing and Urban Development
State Association of REALTORS®
   

12. The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is:
Up to 90 hours of community service
Loss of real estate license
Requirement to attend a RESPA education program
A fine of up to $10,000 or up to one year in prison or both
   

QUIZ RESULTS: RESPA


Brush up on this important topic and try the quiz again. To learn more about RESPA, review the Real Estate Settlement Procedures Act (RESPA) page and the Frequently Asked RESPA Questions, both at REALTOR.org.
1. Which of the following is NOT a settlement service that is covered by RESPA?
You chose not to answer this question.
Correct Answer: Furniture moving

Settlement services relate to the making of the federally-related mortgages that are covered under RESPA. Services that are provided after closing typically are not covered by RESPA and are not considered settlement services.

2. Under RESPA, a real estate professional may give in return for the referral of real estate settlement service business:
You chose not to answer this question.
Correct Answer: A thank you

RESPA prohibits any person from giving or receiving a fee, kickback, or “a thing of value” for referring business to a mortgage broker or banker, or a title company. Saying thank you is not considered a thing of value for purposes of the Act.

3. To provide consumers with cost information about the mortgage process, RESPA created the good faith estimate (GFE) and the HUD-1 closing document. RESPA requires that the HUD-1 form be provided to the:
You chose not to answer this question.
Correct Answer: Buyer

The person conducting the settlement needs to make the HUD-1 form available for inspection to the buyer (borrower) at or before settlement. The Act does not require that copies be provided to real estate professionals.

4. Substantially revised versions of the GFE and HUD-1 took effect at the beginning of 2010. Among other things, HUD’s goal was to reduce surprises to consumers at the closing table by restricting how much some costs could change between the GFE and the HUD-1. What is included among the costs that are allowed to change?
You chose not to answer this question.
Correct Answer: Title insurance

On the GFE, HUD identifies four charges that cannot change at all. These are 1.) the lender’s origination charge, 2.) the credit charges (points) for the specific interest rate chosen (after the interest rate is locked in), 3.) the borrower’s adjusted origination charges (after the interest rate is locked in), and 4.) transfer taxes. Title insurance costs can change up to 10 percent if the lender selects the insurer or the borrower chooses an insurer from a list provided by the lender, or they can change an unlimited amount if the borrower selects the insurer completely separate from the lender.

5. In addition to reducing consumer surprises at the closing table, the revised GFE and HUD-1 are intended to make comparison shopping easier for consumers. To do that, the GFE lets consumers look at a proposed loan under all but one of these different scenarios:
You chose not to answer this question.
Correct Answer: The loan with different underwriting terms

The GFE is intended to ease comparisons among costs (interest rate, brokerage fees, etc.) associated with a loan, not comparisons among different underwriting terms such as the loan-to-value ratio and length of the term.

6. To combat higher costs in real estate transactions, Section 8 of RESPA makes it a criminal act for settlement service providers to pay fees for the referral of business. One exception to this rule allows a real estate professional to pay a referral fee to:
You chose not to answer this question.
Correct Answer: Another licensed real estate broker who refers a buyer from another part of the country

Section 8(c) of RESPA includes an exception to the general prohibition on the payment of referral fees for payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate salespeople and brokers.

7 . Another exception to the RESPA rules contained in Section 8 allows real estate professionals to receive compensation for:
You chose not to answer this question.
Correct Answer: The reasonable value of goods and services actually provided or performed

Section 8(c) of RESPA states that nothing in the section prohibiting the payment of referral fees shall be construed as prohibiting the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.

8 . RESPA allows title companies to provide real estate professionals:
You chose not to answer this question.
Correct Answer: Notepads that have been imprinted with the title company’s name and phone number

The RESPA provision prohibiting the payment of a referral fee does not include normal educational and marketing activities that are not contingent on the referral of business. Since the notepads were not contingent on the referral of business and are typical marketing materials for a title company, they are not prohibited.

9 . Two companies that provide settlement services and have some degree of common ownership are considered affiliated businesses under RESPA. When there is a referral from one of these companies to the other, RESPA requires the customer receive an affiliated business disclosure that contains specific information, including:
You chose not to answer this question.
Correct Answer: A statement that use of referred service is not required

The disclosure must state the existence of an affiliated business arrangement between you and the company to which you are referring your clients. As part of the disclosure, your clients must be provided a written estimate of the charge or range of charges made by the company to which the clients are being referred and information that makes clear that your clients are not required to use that company.

10. The affiliated business provision, which is an exception to the general RESPA rule regarding compensation for referrals, allows:
You chose not to answer this question.
Correct Answer: The party making the referral to receive a return on its ownership interest in the company receiving the referral

The only thing of value that can be received from an affiliated business arrangement, other than the payments permitted under other subsections of Section 8 of the Act, is a return on the ownership interest.

11. RESPA is interpreted and enforced by the:
You chose not to answer this question.
Correct Answer: U.S. Department of Housing and Urban Development

The Act vests the HUD Secretary with the authority to interpret the Act, conduct investigations into violations, and bring actions for violations of the Act. Parties other than the HUD Secretary, such as customers, also may be authorized to sue for violations of certain provisions of the Act.

12. The penalty for illegally giving or receiving a kickback, which is covered in Section 8 of RESPA, is:
You chose not to answer this question.
Correct Answer: A fine of up to $10,000 or up to one year in prison or both

Penalties for violation of Section 8 of the Act may include a fine of up to $10,000 or up to one year in prison, or both.

SHOPPING AROUND FOR A MORTGAGE
Here’s the inside scoop on how to do it right.
 

Erin Meredith, CMPS®

The Meredith Team
Danville, CA 94526

925-918-0585 direct
925-918-0585 alternate
925-226-3215 fax
erin@cmgmortgage.com
http://www.cmgmortgage.com

 

Always make sure you are working with an experienced, professional lender. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

Here are four simple questions your lender absolutely must be able to answer correctly. If they do not know the answers immediately leave and go to a lender that does.

  1. What are mortgage interest rates based on? The only correct answer is Mortgage Backed Securities or Mortgage Bonds, not the Fed or the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. Do not work with a lender who has their eyes on the wrong indicators.
  2. What is the next Economic Report or event that could cause interest rate movement? A professional lender will have this at their fingertips. To receive an up-to-date weekly calendar of weekly economic reports and events that may cause rates to fluctuate, contact a Certified Mortgage Planning Specialist professional today.
  3. When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates? The answer may surprise you. When the Fed makes a move, they are changing a rate called the “Fed Funds Rate”. This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, contact a CMPS professional today.
  4. What is happening in the market today and what do you see in the near future? If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last week’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.

Be smart… Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life but CMPS professionals do this every single day. It’s your home and your future. It’s our profession and our passion. We’re ready to work for your best interest.

 

fast facts
  • What are mortgage rates
    based on?
  • What is the next Economic
    Report or event that could
    cause interest rate movement?
  • When Bernanke and the
    Fed “changes rates”, what
    does that mean?
  • What is happening in the
    market today and what do
    you see in the near future?

RESPA – Real Estate
Settlement Procedures Act

- -
 Information by State
 Print version

 
 

Warning: Foreclosure Scams

 -   Loan Servicing Scams
 -   Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress
 -   Mortgage Fraud Information from the FBI
 -   Consumer Tips for Avoiding Foreclosure Rescue Scams

Foreclosure Avoidance and Mortgage Assistance

 -   Contact a HUD Approved Housing Counselor in Your Area
 -   Making Home Affordable
 -   Hope for Homeowners: Foreclosure Avoidance
 -   Guide to Avoiding Foreclosure
 -   Explore Workout Solutions with Your Lender

Highlights

 -   HUD’s new settlement cost booklet [Icon: New]
 -   RESPA Plain English 12-09 [Icon: New]
 -   New RESPA Rule FAQs (Updated 11/19/09)
 -   RESPA Final Rule
 -   Good Faith Estimate
 -   Good Faith Estimate Instructions
 -   Fillable Good Faith Estimate
 -   HUD-1
 -   HUD-1 Instructions
 -   Fillable Hud-1
 -   HUD1-A
 -   Regulatory Impact Analysis
 -   Withdrawal of Revised Definition of
“Required Use”

Consumers

RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

 -   More about RESPA
 -   FAQ’s for Homebuyers
 -   FAQ’s about Escrow Accounts
 -   Know Your Borrower’s Rights
 -   Your Rights and the Responsibilities of the Mortgage Servicer
 -   Sample Complaint to Lender
 -   Buying Your Home: Settlement Costs
 -   Property Tax Alert
 -   Private Mortgage Insurance (PMI) Act Information
 -   State and Local Consumer Agencies
 -   Other Federal Resources
 -   Statute
 -   Final Rules & Regulations
 -   Proposed Rules
 -   Statements of Policy
 -   Program Guidance
 -   Federal Register Notices
 -   Public Guidance Documents
 -   FAQ’s for Industry
 -   Settlement Agreements
 -   Joint Report to Congress
 -   Legal Proceedings

 

Comments and Questions

 

HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new HUD-1 settlement statement. New RESPA regulations were published November 17, 2008 and are scheduled to take full effect on January 1, 2010. The “New RESPA Rule FAQs” were comprised from industry questions and are posted to facilitate implementation of these new requirements.  

 
Content current as of 17 December 2009   Follow this link to go  Back to top   

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Telephone: (202) 708-1112   TTY: (202) 708-1455
Find the address of a HUD office near you
 
 

Contact The Meredith Mortgage Team

We Will Always Have Your Best Interest In Mind

Erin & Kathleen

Your In-House Partners In Success

The Bay Area’s Premier Bank & Mortgage Team

Mortgage Banking Services

Erin Direct: 925.918.0585

Kathleen Direct: 925.735.6621

meredithteam@rockcliff.com

 

Employer-Assisted Housing Regional Forums NAR held the first of our two regional EAH Forums in Philadelphia on November 19. The Forum was designed to bring together regional, state and local housing leaders, local and county government, REALTORS® and business professionals to inform and educate them about employer-assisted housing. As a conference host, NAR played a strong role in the Forum, with REALTORS® serving on panels and giving remarks at various segments of the program. Participants were actively engaged in discussions with industry professionals as they presented models of a variety of EAH programs, including a presentation of a Realtor-driven EAH model established in Maryland. One of the panels provided an in-depth look at the creation of the city of Philadelphia’s EAH program. Steve Wing of CVS Corporation, who was the keynote speaker, shared insights and best practices on implementing a successful EAH program. View the speaker presentations.  
  Housing Opportunity Speaker Series In January 2010, the Housing Opportunity Program will launch a web-based Speakers Series, which will cover a variety of housing opportunity topics of interest to Realtors® and Realtor® association staff. The Speakers Series will consist of monthly, one-hour, web-based presentations. The Speakers Series will provide an avenue for the Housing Opportunity Program and its strategic partners to share important information and resources on a more regular basis. The schedule for the 2010 Speaker Series will be on realtor.org and will be included each month in Housing Opportunity Notes. Each webinar will be recorded and available for download from realtor.org.  
  Ira Gribin Workforce Housing Grants Update At the NAR Annual Conference, representatives from three state associations (CA,FL,WA) that have already received grants through the Ira Gribin Workforce Housing grants program gave presentations on their programs and their experience in the grant application process. To date, 13 states have been awarded grants totaling $1.6 million. Get the latest update on the grants and find out how your state association can apply.  
  Expanding Housing Opportunities Class Update The final 2009 Expanding Housing Opportunities Pilot Class is scheduled for Wednesday, December 9, in Chicago, IL. The class provides a comprehensive overview of affordable housing and the REALTORS®’ role in that market. Register for the class.  
  Home From Work/Employer-Assisted Housing Class Update Starting in January, the Home From Work class will be called the Employer-Assisted Housing (EAH) Class. The EAH class encourages and promotes employer-assisted housing (EAH) which is housing benefits employers can offer to help strengthen their employees’ potential to purchase their own homes. The class teaches Realtors® how to work with local employers to implement an EAH benefit. The updated class will be four hours and has four modules: Workforce Housing Overview; EAH as a Workforce Housing Solution; Types of EAH; and Your Action Plan. Tools have been created to assist with the Action Plan, including letter templates to the employer, lender and non-profit; a script and talking points for the meeting with the employer; a homebuyer workshop PowerPoint and worksheets. For more information, visit Realtor.org.  
  Good Neighbor Winners Help Those in Need Home renovations for the poor, assistance for persons with disabilities, and feeding the hungry are among the services provided by this year’s winners of the REALTOR® Magazine Good Neighbor awards. Take a look at this year’s winners.  
  Legislative & Regulatory News
  Tax Credit Extension, Expansion Passed The Senate and House both passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers. More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years. The legislation was signed into law by President Obama on November 6.Compare the existing credit to the newly passed version.

Home Buyer Tax Credit FAQ

 
  Fannie Mae Announces Deed-For-Lease Program On November 5, 2009, Fannie Mae announced its new Deed-for-Lease Program (D4L) that allows eligible borrowers facing foreclosure (or their tenants) to stay in their primary residences. Under D4L, the borrower transfers ownership of the property to the lender through a deed-in-lieu of foreclosure and the borrower (or the tenant) signs a lease for up to 12 months. The program is designed for borrowers who do not qualify for other workout solutions, including modifications, or who do not meet their obligations under the modification. Read the details on Fannie Mae’s website.  
  New Rules to Clarify Fees New regulations from the Department of Housing and Urban Development will require that closing costs be spelled out on a revised and consumer-friendly version of the good-faith estimate form that borrowers are supposed to receive within three days of applying for a mortgage. Read the details.  
  Treasury Department Announces Home Affordable Foreclosure Alternatives Program On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Read more on the guidelines from HAMP and from NAR.  
  Housing & Economic Indicators
  Pending Home Sales Index and Forecast Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001. Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year” he said. Read the Press Release.  
  Existing-Home Sales Index Existing-home sales are up and inventories are down, thanks in large part to the home buyer tax credit. Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. Read the news release

See all the housing & economic indicators from NAR’s Research Department.