RESPA Flashcards
RESPA
Real Estate Settlement Procedures Act (Regulation X) is a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.
Construction Loan
A short-term, open-end loan that finances the cost of building a new home. The lender pays the builder based on milestones accomplished during the building process. For example, once a subcontractor pours the foundation and it is approved by inspectors the lender pays for their service.
Bridge Loan
A short-term loan that helps to secure financing for transactional periods. It is normally used until a long-term loaned can be processed, for example, when closing on a new home before the present home is sold. It is also known as a “swing loan”.
Settlement
Another name for “closing”.
Kickbacks
Anything of value given as a referral fee.
Survey
A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Surveys are conducted by licensed surveyors and are normally required by the lender in order to confirm that the property boundaries and features such as buildings, and easements are correctly described in the legal description of the property.
Settlement Services
Third party services provided by appraisers, inspectors, credit reporting agencies, title insurers and loan processors.
Loss Mitigation
A process through which lenders work with delinquent homeowners to help them avoid foreclosures. Loss mitigation measures long-term forbearance, mortgage modification or pre-foreclosure sale of the property.
Closed-End Loan
A type of loan in which the terms and maturity day of the mortgage loan cannot change. However, the borrower is allowed one-time access to funds obtained from the mortgage loan at closing. An example is a 30-year fixed mortgage.
Business Day
Includes all calendar days, except Sundays and legal holidays.
Counsel
Formal advice (advice provided by an acknowledged professional).
Good Faith Estimate (GFE)
A disclosure due to potential borrower within 3 days of a loan application, or immediately, if the loan application is made in person. It is an estimate associated with the costs and fees of a loan. Seller’s costs are never on the disclosure.
HUD-1 Settlement Statement
A standard/uniform settlement statement that is due to the borrowers at closing, or 1 day before closing upon request. this statement lists the actual costs, fees, interest, and other features associated with a loan. It meets the requirements established by RESPA for a “uniform settlement disclosure.” Separate versions are prepared for both the buyer and seller for closing.
