What federal statute serves to control the settlement costs of residential mortgage loans?

The Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. 2601 et seq.) (the Act) became effective on June 20, 1975.

What does RESPA regulate loans for?

RESPA applies to the majority of purchase loans, refinances, property improvement loans, and equity lines of credit. RESPA requires lenders, mortgage brokers, or servicers of home loans to provide disclosures to borrowers concerning real estate transactions, settlement services, and consumer protection laws.

What is a settlement service mortgage?

Settlement Services means the provision of title, closing, escrow or search-related services for residential real estate transactions and all other mortgage-related transactions (including, without limitation, first mortgage loans, second mortgage loans, home equity lines of credit, other home equity loans and …

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Does RESPA set prices for settlement services?

Section 9 of RESPA prohibits a seller from requiring the use of a particular title insurance company when the buyer will pay for the title insurance. … A: RESPA does not regulate the amounts that settlement service providers can receive, and so would not address this practice.

What federal law requires full disclosure of borrowing and closing costs?

Truth In Lending Act Defined A federal law that helps promote consumer awareness, it essentially requires lenders to provide standardized disclosures about loan terms and costs, including information such as the annual percentage rate, terms of the loan, and total loan cost.

What loans are not covered by RESPA?

Commercial or Business Loans Normally, loans secured by real estate for a business or agricultural purpose are not covered by RESPA. However, if the loan is made to an individual entity to purchase or improve a rental property of 1 to 4 residential units, then it is regulated by RESPA.

What is a RESPA violation?

When any payment has been made or received for anything considered of value in exchanges for a referral of a settlement service in the real estate deal, the person doing so is violating the RESPA. This means if one company provides gifts or services for a referral, they are usually in violation.

What does a settlement service provider do?

Definition of Settlement Service Rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender);

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What is considered a settlement service provider under RESPA?

RESPA provides quite a broad definition of a settlement service, starting with the meaning of a “Settlement Service.” That is, whoever provides a settlement service is obviously a settlement service provider. … Provision of any other services for which a settlement service provider requires a borrower or seller to pay.

Is escrow a settlement service?

To convey a property from a seller to a buyer, or encumber a property with a new mortgage, First American provides escrow and settlement services as a neutral third party to the transaction. Prepares a final statement outlining funds received and to be disbursed in the transaction. …

What is an example of a RESPA violation?

You violate RESPA when you receive or make a payment (or anything else of value) in exchange for a referral of a settlement service. For example, HUD once recently settled with an appraiser who gave a mortgage company’s employees restaurant gift certificates in exchange for referrals.

What types of loans does RESPA apply to?

The Real Estate Settlement Procedures Act (RESPA) is applicable to all “federally related mortgage loans,” except as provided under 12 CFR 1024.5(b) and 1024.5(d), discussed below.

What mortgage law prohibits kickbacks and unearned fees?

RESPA Section 8 Section 8 prohibits three different types of financial practices by settlement providers: kickbacks, fee splitting, and unearned fees.

What triggers full disclosure under TILA?

Examples of Triggering Terms The amount of any payment expressed as a percentage or a dollar amount (example: “$15 per month” or “monthly payments of under $100”) The number of payments (example: “60 monthly payments and you’re paid up” or “12 small payments is all you owe”)

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Which law requires disclosure of all sources of income mortgage?

The Home Mortgage Disclosure Act (HMDA) requires many financial institutions to maintain, report, and publicly disclose loan-level information about mortgages. … HMDA was originally enacted by Congress in 1975 and is implemented by Regulation C.

How long does a servicer have to make a good faith effort to refund any credit balance to a consumer?

Good faith effort to refund. The creditor must take positive steps to return any credit balance that has remained in the account for over 6 months. This includes, if necessary, attempts to trace the consumer through the consumer’s last known address or telephone number, or both.

Which type of loan is exempt from RESPA quizlet?

RESPA does not apply to what kinds of loans? – Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate. – Loans made by persons who are not considered “creditors” because they make five or fewer mortgages per year. You just studied 31 terms!

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