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• Settlement Costs

RESPA Disclosures

RESPA disclosures are put in place to aid consumers become more astute shoppers for settlement services by requiring that lenders provide certain disclosures to the borrower during the course of their loan. Mandated by RESPA (Real Estate Settlement Procedures Act), RESPA disclosures allow the borrower to examine costs that are associated with the settlement procedure. This allows the borrower to accurately track through the costs associated with a home transaction.

Some examples of RESPA disclosures include the Good Faith Estimate of Settlement Costs. This disclosure occurs during the application of a loan process and requires that your loan source provide you with a Good Faith Estimate of the settlement service charges attached to the settlement service. This disclosure should be provided to you within three days of loan application and although the amount listed are close estimates, the amount of charges listed often vary from the actual service charges. Usually, changing market conditions alter the service charges. However, it is important that you retain this document, as you will be able to question your lender about the cost changes.

Examples

Other examples of RESPA disclosures include: the Servicing Disclosure Statement, which occurs within three days of a loan application and details whether your loan source expects that someone else will be servicing your loan; Affiliated Business Arrangements, which are documents stating that you are not required to use the affiliate of a loan source that you had applied to; and HUD-1 Settlement Statement, which is a statement that you are allowed to examine one business day before the settlement that details the services provided to you as well as its charges.

Another RESPA disclosure is the Escrow Account Operation & Disclosures, which is used in instances where your loan source has insisted that you establish an escrow account to insure that your taxes and insurance premiums are paid on a timely basis. This document is given to you within 45 days of the settlement and is a statement that details all of the payments that are to be deposited into the escrow account and how this money will be disbursed in the year ahead.