RESPA Flashcards
What does RESPA stand for?
Real Estate Settlement Procedures ACT
What regulation is RESPA?
Regulation X
What is the regulatory agency for RESPA?
HUD (The Department of Housing and Urban Development)
Who administers and enforces RESPA?
CFPB (Consumer Financial Protection Bureau)
What is the purpose of RESPA? (Name three things RESPA focuses on…)
- Allows consumers to obtain information about closing costs so they can shop for settlement services
- Protects consumers from excessive costs and unearned fees
- Limits the amount of funds that creditors can require consumers to deposit into escrow accounts
A loan originator is said to have taken an application when they collect what?
P - Property Address A - Address
E - Estimated Value L - Loan Amount
N - Name I - Income
C - Credit (SSN) E - Estimated Value
I - Income N - Name
L - Loan Amount S - SSN
Within how many days does the MLO have to deliver the initial set of disclosures after an application is taken?
3 business days
RESPA applies only to federally related mortgage loans. What loans are not covered by RESPA? Name four…
- Loans for 25 acres or more
- Loans for agricultural, business or commercial purposes
- Loans secured by vacant land
- Temporary financing (bridge loans)
- Loan assumptions
- Loan conversions
- Loans sold in the secondary markets
- All cash sales
- Seller financing (Seller carry)
What three types of transactions use the Good Faith Estimate (GFE)?
- HELOCS
- Reverse mortgages (HECM)
- Closed end loans where the creditor makes 5 or fewer loans annually
What is a Good Faith Estimate (GFE)?
It is an estimate of the charges that are due at the time of closing
When is the Good Faith Estimate (GFE) required?
It is required within 3 business days of application
For how long must the GFE be retained?
3 years
For what types of transactions is a HUD-1 Settlement Statement utilized?
-Reverse mortgages (HECM)
- Closed end loans where the creditor makes 5 or fewer loans annually
What is the HUD-1 Settlement Statement?
It is a document provided at closing that itemizes the actual costs of settling the loan
How long must the HUD-1 Settlement Statement be retained?
5 years
What does section 6 of RESPA cover?
Loan servicing
What does section 8 of RESPA cover?
Kickbacks, fee-splitting, and unearned fees
What does section 10 of RESPA cover?
Escrow accounts
How many days does the lender have to provide the Initial Escrow Statement to the borrower?
45 days
*This is typically delivered to the borrower at closing
What is the penalty for a violation of section 8 of RESPA?
Fines up to $10,000 and/or 1 year in prison
What identifies and communicates if there is a surplus in a borrower’s escrow account?
The Annual Escrow Statement
How many days does the lender have to refund an escrow surplus to the borrower?
What is considered a surplus?
The lender has within 30 days from the escrow analysis to refund a surplus to the borrower.
A surplus is considered to be more than $50 over the 2 month cushion
If the original lender will not be servicing the loan, they must provide what to a borrower within 3 business days of loan application?
- Mortgage Servicing Disclosure Statement (MSDS)
- Initial Servicing Disclosure Statement (ISDS)
- Initial Servicing Transfer Disclosure (ISTD)
When a loan is transferred to another servicer, what must be provided to the borrower?
A servicing transfer statement
