RESPA Flashcards
What does RESPA stand for, and what is its Regulation?
The Real Estate Settlement Procedures Act; Regulation X. “reXpa.”
What is RESPAs purpose?
It helps consumers become better shoppers for settlement services.
What type of property does RESPA deal with?
RESPA covers 1-4 unit Residential Property, or Owner Occupied. The property must be owner occupied, and 4 units or under, and not sit on more than 25 acres of land.
What sales does RESPA not deal with?
-All cash sales (Because there is no loan.)
-Rental Property of more than 4 units or more.
Commercial property.
-Property of 25 acres or more. Considered agricultural.
What is the punishment for violating RESPA?
A fine of up to $10,000 and/or imprisonment of up to 1 year.
What is considered Settlement Services?
Services that are needed to close an Escrow.
Which Sections do MLOs need to know?
- Section 6: Deals w/ Mortgage Servicers. Designed to address servicers’ obligation to correct errors & work w/ home buyers if payments are not being made.
- Section 8: Prohibits Kickbacks, Fee-splitting, & Unearned Fees.
- Section 9: Deals w/ Title Insurance. prohibits seller from requiring the home buyer to use a particular title insurance company as a condition of a sale. (Allows buyers to sue for an amount equal to 3Xs (treble damages.)
- Section 10: Deals w/ Escrow Accounts. Sets limits on the amounts that a lender may req. a borrower to put into an escrow acc. for purposes of paying taxes, insurances, and related charges.
What is a cushion in relation to Escrow Account in Section 10 of RESPA?
At closing, the lender may take 2 months worth, or 1/6th of the annual amount that is suppose to paid into Escrow.
According to Section 10 of RESPA, how often is the lender allowed to require the borrower to pay into the escrow account?
Once a month, or each month, no more than 1/12th of annual disbursement.
Section 10 of RESPA requires an annual escrow of analysis, what is that?
States how much of taxes and insurance was taken out, and when. It also states if there is an excess.
According to Section 10 of RESPA, when an annual escrow analysis occurs, how much of an excess must there be for it to be returned to the borrower?
$50 or more.
Can lenders charge borrowers a fee for preparing disclosures?
No they can not; Federal law prohibits lenders & servicers from charging a fee for the prep. of the RESPA, TILA or any other disclosure statements req. by the law for 1-4 unit res. property.
