RESPA

Question 1

What does RESPA stand for?

Answer 1

Real Estate Settlement Procedures Act

Question 2

What regulation does RESPA fall under?

Answer 2

X

Question 3

What is the main purpose of RESPA?

Answer 3

To drive down high settlement costs.

Question 4

How does RESPA drive down high settlement costs?

Answer 4

By implementing protections for consumers when securing a mortgage

Question 5

What are ways in which RESPA protects consumers?

Answer 5

1. By requiring that pertinent disclosures related to settlement costs (i.e. a Good Faith Estimate of Settlement Costs(GFE), Special Information Booklet, HUD settlement statement and Initial Escrow Statement) be given to the borrower in a timely manner
2. By prohibiting certain real estate practices
3. By putting regulations on the amount and use of escrow funds

Question 6

Regulation X refers to all _______ mortgage loans. What are the exceptions?

Answer 6

Federally-related

1. Seller-financed transactions
2. Construction loans
3. Bridge loans
4. Commercial loans
5. Home equity loans
6. Reverse mortgages

Question 7

When was RESPA passed?

Answer 7

1974

Question 8

Who enacted RESPA?

Answer 8

HUD

Question 9

In what year did RESPA assume new enforcement and rule making authority and by who?

Answer 9

2011 by CFPB

Question 10

What is a mortgage broker?

Answer 10

An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use their own funds to originate mortgages

Question 11

What loan types are applicable under RESPA?

Answer 11

Home loans made for residential properties designed to accommodate 1-4 families.

Question 12

RESPA prohibitions

Answer 12

1. Kickbacks and referral fees: lenders, real estate agents, or any other parties involved in the mortgage process cannot give or receive kickbacks or referral fees in exchange for business referrals.
2. Mandatory use: Lenders are prohibited from requiring borrowers to use a particular title insurance company, attorney, or other settlement service provider in order to obtain a mortgage loan. Borrowers have the right to shop around for settlement services.
3. Fee splitting: RESPA prohibits the splitting of fees between settlement service providers unless a bona fide service is actually performed.
4. Unearned fees: Lenders cannot charge fees for services that were not actually performed, or for amounts exceeding the reasonable value of the services provided.
5. Escrow accounts: Lenders are required to properly manage escrow accounts and are prohibited from forcing borrowers to maintain excessive escrow amounts. Borrowers have the right to receive an annual escrow account analysis.
6. Loan servicing transfers: Lenders are required to properly notify borrowers of any transfers of loan servicing to another entity, and are prohibited from charging excessive fees in connection with the transfer.
7. Misrepresentation: RESPA prohibits any misrepresentation or false statements related to the mortgage loan transaction.

Question 13

What are some limitations of RESPA?

Answer 13

1. CFPB has limited resources and may not be able to investigate every complaint or violation.
2. It only focuses on disclosures and kickbacks.
3. Penalties and fines may not be enough to deter misconduct or compensate harmed consumers.

Question 14

RESPA settlement services

Answer 14

1. Title insurance
2. Appraisals
3. Loan origination fees

Question 15

When does the GFE have to go out by?

Answer 15

Within 3 business days of receiving a loan application

Question 16

What is GFE?

Answer 16

Good Faith Estimate of settlement costs

Question 17

What information is required or the borrower on their application?

Answer 17

(not sure this is right)
1. Full name
2. Social Security number
3. Date of birth
4. Home address
5. Email address
6. Phone number
7. Employment information
8. Income
9. Financial information (assets, liabilities, etc.)
10. Loan amount requested
11. Loan purpose
12. Co-borrower information (if applicable)

Question 18

Foreclosure process

Answer 18

Under RESPA, servicers must:
-contact borrowers by phone or in-person within 36 days of delinquent payment and again within 36 days of each subsequent delinquency
-inform borrower of loss mitigation options that might be available such as modification, short sale, or deed in lieu of foreclosure
-contact borrower in writing no later than 45 days after a missed payment and again within 45 days of each late payment, however, only one written notice needs to be provided within a 180-day period
-appoint personnel to help the borrower before 45 days of delinquency
-not participate in dual tracking (evaluating a borrower for loss mitigation while simultaneously pursuing a foreclosure)
-wait more than 120 days past delinquency before starting the foreclosure and only if the borrower has not submitted an application for loss mitigation or been approved for any
-stop the foreclosure if the borrower completed a loss mitigation application more than 37 days before the foreclosure sale
*generally doesn’t apply to HELOCs and reverse mortgages

Question 19

Initial escrow statements

Answer 19

Details the specific charges that borrowers will pay into escrow (money towards upcoming tax and insurance bills) each month