How does the Real Estate Settlement Procedures Act (“RESPA”) affect a home purchase?
The Real Estate Settlement Procedures Act requires lenders to disclose information to potential customers throughout the mortgage process. By doing so, it protects borrowers from abuses by lending institutions. Lenders must fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction. When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers a: • Special Information Booklet, which contains consumer information regarding various real estate settlement services (required for purchase transactions only) • Good Faith Estimate (“GFE”) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use a particular settlement provider, then the lender must disclose this requirement on the GFE. • Mortgage
