Madison Title Agency Highlights New RESPA Laws At Seminar For Industry Professionals
LAKEWOOD, NJ, April 21, 2010 â€“ Madison Title Agency recently detailed significant changes in the Real Estate Settlement Procedures Act (RESPA) at a well-attended seminar for industry professionals. The program detailed major revisions implemented by the U.S. Department of Housing and Urban Development (HUD) this year.
The regulatory changes are complex and sweeping in scope according to Elliot Zaks, Director of Operations for Madison Title Agency. The revised regulations impact title activity in all 50 states. They became effective on January 1, 2010, although HUD announced it would “exercise restraint enforcing the new requirements” through April 1, 2010.
“In an industry that now faces a number of significant challenges, the RESPA changes have been designed to control costs and define in detail real estate closing procedures to protect consumers,” noted Zaks. “Lenders, mortgage brokers, loan officers, title agents, attorneys and realtors are all impacted in addition to consumers.” Madison Title, which operates in all U.S. states, created the seminar, which is also available as a webinar, to help professionals better understand and implement the new requirements.
Outlining RESPA Changes
The changes announced by HUD stipulate that consumers receive disclosures at various times in the transaction; they also forbid kickbacks and fees that would increase the cost of settlement services. Under the new HUD regulations, loan originators will have to provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs. In order to make the closing process more transparent for buyers, closing agents will also be required to provide borrowers with a revised HUD-1 Settlement Statement that clarifies terms and conditions.
- Mortgage brokers will need to calculate their commissions from their lenders (known as yield-spread premiums) as part of the loan origination fee. HUD hopes that by integrating the yield-spread premium into the origination fee, brokers will be less likely to place their customers into loans at the high end of the interest-rate spread.
- Lenders will have to complete a new Good Faith Estimate form, which will be three pages long as opposed to the current two-page form.
- Origination fees and transfer taxes on the HUD-1 Settlement Statement must be exactly as stated on the lender's Good Faith Estimate.
- Some costs from entities unaffiliated with the lender (i.e. certain title company and inspection fees) can change between the Good Faith Estimate and the HUD-1, but the change cannot be greater than 10%. Deals may still close if the discrepancy is greater than 10%, but all discrepancies must be reconciled and corrected within 30 days.
“The new RESPA regulations clearly explain any terms that could confuse buyers and clarify conditions that might have been buried in fine print or vaguely stated with confusing industry jargon,” continued Zaks. “The changes are part of an on-going movement towards greater transparency in real estate transactions and represent a positive development for the consumer.”
Based in Lakewood, N.J., Madison Title Agency is a full-service, nationwide title agency that handles searches, writes policies, manages transactions and provides closing and escrow services for commercial and residential deals of all sizes, as well as offering REO solutions and bulk transaction management services. With over 100 employees, including in-house attorneys, licensed title examiners, and support staff, Madison Title Agency facilitates more than 10,000 transactions a year and writes title on commercial and residential deals in the billions of dollars.
Madison’s RESPA seminar was offered through the company’s educational arm, the Madison Learning Center (MLC), which provides an ongoing program of educational seminars and webinars to real estate professionals. Along with seminars and webinars, MLC also offers complimentary 1, 2 and 3-hour courses on a host of topics approved for CPE and CLE credit with national and state accrediting agencies. All MLC instructors are authorities in their field of expertise, and most are attorneys and/or CPAs.
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