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Disclaimer
One of the purposes of RESPA is to help consumers become better shoppers
for settlement services. RESPA requires that borrowers receive
disclosures at various times. Some disclosures spell out the costs
associated with the settlement, outline lender servicing and escrow
account practices and describe business relationships between settlement
service providers.
Good Faith Estimate of Settlement Costs.
RESPA requires that, when you apply for a loan, the lender or mortgage
broker give you a Good Faith Estimate of settlement service charges you
will likely have to pay. If you do not get this Good Faith Estimate when
you apply, the lender or mortgage broker must mail or deliver it to you
within the next three business days.
Be aware that the amounts listed on the Good Faith Estimate are only
estimates. Actual costs may vary. Changing market conditions can affect
prices. Remember that the lender's estimate is not a guarantee. Keep
your Good Faith Estimate so you can compare it with the final settlement
costs and ask the lender questions about any changes.
Servicing Disclosure Statement. RESPA
requires the lender or mortgage broker to tell you in writing, when you
apply for a loan or within the next three business days, whether it
expects that someone else will be servicing your loan (collecting your
payments).
Affiliated Business Arrangements.
Sometimes, several businesses that offer settlement services are owned
or controlled by a common corporate parent. These businesses are known
as "affiliates." When a lender, real estate broker, or other participant
in your settlement refers you to an affiliate for a settlement service
(such as when a real estate broker refers you to a mortgage broker
affiliate), RESPA requires the referring party to give you an Affiliated
Business Arrangement Disclosure. This form will remind you that you are
generally not required, with certain exceptions, to use the affiliate
and are free to shop for other providers.
HUD-1 Settlement Statement. One business day
before the settlement, you have the right to inspect the HUD-1
Settlement Statement. This statement itemizes the services provided to
you and the fees charged to you. This form is filled out by the
settlement agent who will conduct the settlement. Be sure you have the
name, address, and telephone number of the settlement agent if you wish
to inspect this form. The fully completed HUD-1 Settlement Statement
generally must be delivered or mailed to you at or before the
settlement. In cases where there is no settlement meeting, the escrow
agent will mail you the HUD-1 after settlement, and you have no right to
inspect it one day before settlement.
Escrow Account Operation & Disclosures. Your
lender may require you to establish an escrow or impound account to
insure that your taxes and insurance premiums are paid on time. If so,
you will probably have to pay an initial amount at the settlement to
start the account and an additional amount with each month's regular
payment. Your escrow account payments may include a "cushion" or an
extra amount to ensure that the lender has enough money to make the
payments when due. RESPA limits the amount of the cushion to a maximum
of two months of escrow payments.
At the settlement or within the next 45 days, the person servicing your
loan must give you an initial escrow account statement. That form will
show all of the payments which are expected to be deposited into the
escrow account and all of the disbursements which are expected to be
made from the escrow account during the year ahead. Your lender or
servicer will review the escrow account annually and send you a
disclosure each year which shows the prior year's activity and any
adjustments necessary in the escrow payments that you will make in the
forthcoming year. |
