Happy New Year! Originally enacted by Congress in 1974 to offer mortgage borrowers with enhanced disclosure of closing costs, RESPA (Real Estate Settlement Procedures Act) essentially eliminates any kickbacks and referral fees associated with a mortgage loan. Published on November 17, 2008, the U.S. Department of Housing and Urban Development (HUD) has scheduled the new RESPA regulations to take effect on January 1, 2010, just three days from now.
The new RESPA guidelines will require mortgage originators to provide a standard Good Faith Estimate (GFE) to their borrowers that clearly discloses the terms of the mortgage loan, as well as all closing costs involved. In addition, the new RESPA guidelines will require all closing agents to provide a new HUD-1 settlement statement to the borrowers.
For borrowers, RESPA will help them make better-informed decisions, whether they are purchasing a new home or refinancing their existing home. Enforced by HUD, RESPA will require that mortgage loan borrowers receive important disclosures at various stages of their transaction, from the beginning of the loan process to the end. As a consumer protection statute, RESPA outlaws any kickbacks that can increase closing costs.
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