RESPA requires lenders to provide a Loan Estimate within 3 business days of receiving a loan application and a Closing Disclosure at least 3 business days before closing. RESPA prohibits kickbacks—payments for referrals of settlement service business. It requires Affiliated Business Arrangement (AfBA) disclosures when a referring party has a financial interest in the settlement service provider. RESPA also limits the amount lenders can require in escrow accounts for taxes and insurance.
A lender receives a loan application on Monday and must provide the Loan Estimate by Thursday. At closing, if the Closing Disclosure shows that actual costs significantly exceed the estimated costs, certain fees cannot increase at all while others can increase by up to 10%.
Key RESPA timelines for the exam: Loan Estimate within 3 business days of application, Closing Disclosure at least 3 business days before closing. RESPA prohibits KICKBACKS (not just referral fees) and requires AfBA disclosures. RESPA applies to "federally related" mortgage loans—basically most residential loans.
Related Terms
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
Frequently Asked Questions
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