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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 Huntsville Alabama 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 Huntsville Alabama
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 service
provider 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.
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