In the 1970s, the Real Estate Settlement Procedures Act (RESPA) was implemented. RESPA has an impact on today’s real estate transactions as well, particularly from a borrower’s perspective. The more a Florida borrower knows about RESPA, the better able he or she will be to know what to expect when navigating a real estate transaction, especially when applying for a loan.
Borrowers protected by RESPA disclosure requirements
In adherence to RESPA regulations, a borrower should receive an information packet within three days of applying for a loan. A booklet contained in the packet explains potential closing costs, escrow and other important real estate issues. RESPA also requires a lender to provide a good faith estimate of what a specific borrower’s total cost will be at settlement.
There is a system in place for filing complaints
A lender must also provide information to a prospective borrower regarding how he or she may file a complaint if a problem arises during the settlement process. RESPA regulations require a lender to disclose various types of information before, during and after settlement. Section 8 of RESPA outlines unlawful settlement agent financial practices, such as fee-splitting or receiving kickbacks. A kickback is an exchange of money or an item of value as payment for a business referral.
Additional support available when complex real estate issues arise
A Florida investor or buyer may encounter any number of complex issues during a real estate transaction. Learning as much as possible about RESPA ahead of time can help a borrower protect his or her financial interests. It is a good idea to meet with a real estate law attorney when considering purchasing real estate. Such an attorney is well-versed in RESPA issues and can help resolve any legal complications that arise during any phase of the settlement process.
