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By Tanya Themistokleous Senior vice president of marketing and sales Closeline Settlements
Settling the New RESPA Frontier
Consider four key attributes in your title company’s settlement services
the u.s. department of housing and
Urban Development (HUD) designed
its update of the Real Estate Settlement Procedures Act (RESPA) to inform homebuyers of their options,
help them shop for the lowest-cost
mortgage and avoid harmful loan offers. According to HUD, the update
also could save the average home-owner $700.
For the mortgage industry, however,
the rules taking effect Jan. 1 have other
implications.
The new RESPA regulations will affect the way brokers determine a good-faith estimate (GFE, sctsm.in/HUDGFE)
because rough estimates are no longer
acceptable. New regulations require
that estimates, for the most part, not be
higher or lower at the closing table. GFEs
previously were only issued after a borrower applied for a loan. Now, they also
are required before loan application.
As a result, most borrowers will receive multiple GFEs during the loan process. In addition, a HUD-1 settlement
statement must be submitted to the borrower at least 24 hours before closing.
These new regulations potentially
could delay closings if the correct paperwork is not prepared in advance.
Thus, the time is now for mortgage professionals to start researching title companies and their settlement systems.
Here are four things to consider when
analyzing a settlement partner.
Quote accuracy: 1. To determine an
accurate GFE, you must have a precise recorded account of all closing
costs. The new regulation prohibits overages on certain closing-cost
estimates to prohibit brokers and
originators from rounding up their
numbers to protect themselves
from losing money from inaccurate
quotes. A reputable settlement partner will want to give its customers
the most-accurate quotes to please
customers and to maintain a positive industry reputation.
turnaround time: 2. GFEs must be reissued if there is a change in the
estimate. In addition to obtaining an
accurate GFE, borrowers now must
receive a new HUD-1 settlement
statement that clearly compares their
final and estimated costs. The HUD-1
must be available to the borrower
at least 24 hours before the closing
appointment. Ultimately, paperwork
changes can lead to long delays.
Choose a settlement partner that
guarantees quick turnaround times
for submitting updated numbers.
online capabilities: 3. Title companies
can deliver an accurate closing cost
quickly and efficiently when operat-
ing with an online settlement system.
The ordering process should be easy
and seamless. It could be wise to
choose a settlement-provider that of-
fers a “fees only” order option, which
gives brokers a fee estimate without
formally placing a full title order.
guarantees: 4. Title companies with
a strong track record of delivering
accurate estimates will prosper.
Some also guarantee estimates
and promise that if all information
is consistent on the lending end, the
closing estimate will remain exactly
the same. This could save time and
headaches in the days leading up to
the closing table.
All mortgage brokers must ensure
that they are prepared to comply with
the new RESPA rules and changes that
take effect Jan. 1. It is equally important to align with title companies that
understand these new regulations and
can help make the process seamless
for the customer through solid settlement services. •
Tanya Themistokleous is the senior vice
president of marketing and sales at Closeline Settlements, a national title and escrow
company headquartered in Rockville, Md.
Themistokleous is an associate member
of the National Association of Mortgage
Brokers, the Mortgage Bankers Association
and the National Association of Professional
Mortgage Women. She can be reached at
(301) 795-2880 or tthemis@closeline.com.
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