RESPA Archives - Page 2 of 3 - Real Estate News and Commentary

December 9, 2009October 5, 2019

Be your best advocate; get to know RESPA

One of the most important pieces of legislation that home buyers need to be aware of is The Real Estate Settlement Procedures Act (a.k.a. RESPA). Although RESPA has been around since 1974, it’s a wonder that the professionals whom consumers depend on have had trouble understanding the law. And in some cases it’s more of a problem of following the law.

To protect the consumer, RESPA clearly spells out some of the many do’s and don’ts for those in the real industry. According to HUD (HUD.gov), RESPA is a “ …consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD…”

Of all the sections of RESPA, Section 9 appears to be the area that gets the least attention. Section 9 prohibits home sellers from requiring home buyers to use a specific title insurance company as a condition of sale. Seems simple enough, right? In an owner occupied resale transaction, a buyer may not encounter such pressure from the seller. However the number of Section 9 complaints from buyers may have increased in the last two years corresponding to the explosion of foreclosures and short sale transactions. Many MLS entries of such sales have remarks such as: “must use ABC title” or “settle with XYZ title,” which are direct or indirect statements that fly in the face of Section 9.

The first thought of a seller who directs the buyer to use a particular title agent may be one of kickbacks and affiliated businesses (which is regulated by RESPA Section 8). However, even if the seller may have a reasonable case to require the use of their title agent as a condition of the sale, the fact is that it is prohibited by Section 9 (caveat notwithstanding).

The reasons for a buyer to choose their own title agent include price and service. If a buyer has the ability to select their own title agent, they can compare prices for title insurance and affiliated services. Additionally, the buyer may also be able to compare title agents on their professional and service reputations. Having the title agent be responsive, file the correct documents, and distribute escrow funds in a timely manner should be taken seriously; title problems may plague you in the future if releases and mortgages are not filed correctly with the County.
Become your best advocate and get acquainted with RESPA. You can visit HUD’s consumer website to get further explanation on Section 9 and other sections of RESPA as well as the complaint process.

If you feel that the seller violated Section 9 and you were forced to use a seller’s title agent as a condition of the sale, consult with an attorney- you may be able to seek damages up to three times the amount you paid for the title insurance.

To enforce RESPA, HUD wants to know about your RESPA complaints by sending an outline of the violation and the violators name, address and phone number (along with your contact information) to the Director, Office of RESPA and Interstate Land Sales, US Department of Housing and Urban Development, Room 9154, 451 7th Street, SW, Washington, DC 20410.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 7, 2009. Copyright © 2009 Dan Krell

August 12, 2009October 5, 2019

Making the right decisions starts with choosing your agent

By Dan Krell &copy 2009
www.DanKrell.com

For a smooth transaction, choose the right providers

If you are a first time home buyer, you may feel a bit confused and certainly overwhelmed by the huge amount of information that suddenly seems to cascade over you. Let’s face it, the real estate industry has changed significantly such that if even if you’re an experienced home buyer you may feel a bit confused and overwhelmed too. Choosing your service providers before you begin searching for a home can assist you through the different phases of the process as well as build a foundation for a smooth transaction.

Taking the time to interview and choose a Realtor, lender, home inspector and title agent before you begin searching for a home will create a team of professionals to guide you through the major aspects of home buying. It may sound a bit much, but when you are embarking on (probably) the most expensive purchase of your life, it’s important to know you are well represented.

Although the Realtor is generally known to assist in home searching and negotiating sales contracts, the agent you choose should be by your side throughout the transaction to help when the road gets bumpy. Besides asking how long the agent has been licensed, you should also ask if the agent is full-time so they may be accessible throughout the day. Additionally, calling an agent’s list of references of recent clients can shed light on the agent’s strengths and weaknesses.

Consulting with a lender prior to making an offer on a home is important; narrowing your choices by interviewing loan officers can help you learn more about their attention to detail as well as focus on customer service. The loan officer will help you through the mortgage process and should be available to assist you from application to closing. Comparing mortgage costs is more than comparing interest rates, asking for and comparing lender fees and points can help you differentiate total lender costs.

After you enter into a contract, you will most likely want to conduct a home inspection to determine the condition of the home. Many home buyers don’t consider choosing a home inspector and rely on the real estate agent to arrange the inspection; however, experience and scope of inspections can vary significantly! Choosing the right home inspector can help you not only accurately determine a home’s condition, but also put you understand age related problems of a home (such as settling) and prepare you for future maintenance. Make sure that the inspector you choose is available by phone and willing to return to the home if you have questions about the inspection.

Like the home inspection, choice of a title agent is often left to the real estate agent. However, choosing a title attorney early in the process may provide you a strong and useful advisor- a title attorney. The title attorney will not only help you understand the closing process, some title attorneys will make themselves available to answer legal questions that may arise from your home purchase.

Taking the time to interview and choose the providers whom you feel comfortable with is important to help guide you through the ups and downs of the home buying process. For more information on the home buying process, please visit the Department of Housing and Urban Development (www.hud.gov/buying).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 3, 2009. Copyright © 2009 Dan Krell.

January 13, 2009October 5, 2019

If you want to settle on your home, bring your money!

Most people don’t think much of settlement day, other than preparing to sign a lot of documents. This is an exciting day to be sure, but there are still many items to consider to make sure your settlement is stress free. One item often overlooked and taken for granted is your funds to close.

Preparing your funds for settlement begins when you receive your Good Faith Estimate (GFE) from your lender. The GFE should provide you an estimate of your closing costs. However the GFE is just an estimate, your settlement agent will provide an accurate closing cost figure by preparing your settlement sheet (also known as the HUD-1).

According to the Real Estate Settlement Procedures Act (RESPA), the home buyer can request a HUD-1 one day prior to settlement (HUD.gov). If requested, the settlement agent must provide a completed HUD-1 to the home buyer with the information available to the settlement agent at that time. Sometimes, the settlement agent does not have all the figures to provide an accurate HUD-1 a day before settlement because lenders sometimes wait to the settlement day to provide their closing instructions, lender charges and required escrows. If you are unsure of the amount to bring to settlement, you should ask your settlement agent. When HUD-1 is delayed due to the home buyer’s lender, some settlement agents often recommend preparing funds based on your GFE.

A common mistake for first time home buyers is not having their funds at settlement or having the funds in the wrong form. Although the home buyer receives a GFE from their lender, some home buyers forget to make those funds available (through account transfers and/or gift funds). Not having your funds will certainly postpone your settlement.

Additionally, the form of the funds brought to settlement is often another point of confusion. Settlement agents prefer a “cashier’s check” for the amount owed, because this type of check is “guaranteed” by your bank and treated as if it were cash.

Sending funds electronically (wiring funds) to your settlement agent is another option to get funds to settlement. Funds are often wired when the home buyer’s bank is not local or large amounts of money are needed for settlement. In today’s digital age, it may seem easier to “instantly” wire funds to your settlement agent; however you are relying on a person to physically input the information, which could cause a delay if not executed immediately. Additionally, there is usually a fee associated with wiring funds.

If you are fortunate to receive a completed HUD-1 a day before settlement, the amount you owe is sometimes not accurate as mistakes are often made on adjustments to property taxes, HOA fees, and seller concessions. These mistakes are often discovered at settlement, so you may actually owe a bit more or less. If while in settlement you find that you owe more, the settlement agent will usually take a personal check for the difference (if the amount is less than $1,000). If you find that you brought more money than you owe, you’ll receive the difference at the end of settlement.

The process of buying and selling a home can be exciting as well as nerve-racking. Being prepared for settlement can reduce anxieties as well as prevent unnecessary delays.

October 19, 2007November 23, 2021

Before you buy- First time home buyer fundamentals

by Dan Krell © 2007
Google+

Don’t let your first time home buying experience be overwhelming. Before you plan your Sunday trip to open houses, it’s important to review the fundamentals and make sure you are going into your home purchase fully aware of the responsibility you are about to take on, as well as prepare you for the process and pitfalls that may come your way.

The first item on the list is to determine how much you can afford. Affordability is determined by your financial state and interest rates. Your financial state includes factors such as your income, debt, savings, and expenses. Interest rates impact on your ability to purchase a home because your monthly payment is based on the rate you lock into; the higher the rate, the higher your payment.

Once you know how much you can afford, make a housing budget. Making a housing budget can help you understand your expenses, which included utilities, maintenance, and other expenses such as cable and internet. Additionally, take into account any interest rate adjustment (if you have an adjustable rate mortgage) and increasing real estate taxes. Many first time home buyers get into trouble because they underestimate their monthly housing expenses, as well as not accounting for rising mortgage payments and real estate taxes.

As a first time homebuyer, you will want to be aware of any special programs that are available to you. There are many local home buyer programs that offer special financing and/or closing assistance through the county, the Housing Opportunities Commission, as well as through banks and organizations.

Talking to a lender can help you understand your credit and how much you can afford. You should compare lenders for interest rates and fees. Lender fees vary significantly and by choosing the right lender, you can possibly save several thousand dollars at settlement.

Knowing your rights as a home buyer can help you prevent problems that may occur. As a homebuyer, you are affected by federal and local fair housing laws, RESPA (Real Estate Settlement Procedures Act), Equal Credit Opportunity Act, Fair Credit Reporting Act, and the Truth in Lending Act. Your real estate agent should be aware of these laws and can help you understand them. You can get more information about these laws at the HUD website, HUD.gov.

As a first time home buyer it is important to know that you have the right to choose your service providers, such as real estate agent, lender, title company, insurance company, etc. Additionally, you have rights specific to obtaining a loan and credit, such as the right to a good faith estimate of settlement charges and interest rate and other disclosures. A list of these rights can be found at the HUD website (www.hud.gov/offices/hsg/sfh/res/resborwr.cfm).

Your next step will be to choose a real estate agent. It is recommended to interview several agents before choosing as your agent will be your trusted guide through the home buying process. A good real estate agent will know and protect your rights, as well as know what home buyer programs are available to you.

Finally, HUD recommends that first time home buyers attend housing counseling to assist in learning these and other fundamentals. It is clear that doing your homework and choosing the right professionals to assist you can make the difference in your home buying experience.

April 6, 2007November 28, 2020

Know Your Rights as a Home Buyer and Make a Budget

Buying your first home is one of the most exciting things you can do; it also happens to be one of the most stressful things in your life as well. To help cope with this wonderful rite of passage, we try to prepare ourselves by doing research and getting advice from family and friends.

In theory, all residential real estate transactions are similar. However, the reality is that every transaction is subtly different with its own problems and issues. To help prepare you for your first purchase, here are some common tips to assist you in your purchase.

Make a budget. Making a housing budget and sticking to it is one of the most important steps in the process. Your housing budget is determined by your income, your debts, and your life style. Consulting with a lender can be helpful determine your housing budget. In creating your housing budget, don’t forget to include other housing related costs such as taxes, home owner’s insurance, utilities, and regular maintenance.

Know your rights. Knowing your home buyer rights can help you make the right choices during the process. If you follow this column, you have read how some real estate professionals are ignorant or unconcerned with real estate laws and ethics. Protect yourself by becoming aware of your rights protected by the Real Estate Settlement Procedures Act (RESPA), Fair Housing laws, and predatory lending laws. You can find more about these laws at HUD.gov.

Among your home buyer rights, you have the right to choose the Realtor, lender, insurance company, and title company you want to work with. Choosing a Realtor is subjective; after all, you are putting your trust in them to assist you in one of the largest purchases of your life. Don’t feel compelled to use a particular lender or title company because your Realtor recommends them or makes promises of discounts. Shop around, get quotes and compare services.

Do your homework. Thinking through such questions as where to live, what type of home to buy, how much to spend, what type of neighborhood amenities are important, will help you in your decisions. You should conduct some research on the communities and homes you are considering to purchase.

If you are uncertain about what is important to you in a home, viewing as many homes as possible can help you determine and narrow your preferences. As you shape your preferences, you will find that it is easier to shop for a home.

Know your expectations. Are your expectations realistic with regard to the home buying process, and how much home you can buy? When interviewing Realtors, discuss your expectations of them as well as what is expected from you in return. You should also discuss your expectations of what you can buy. It is common for first time home buyers to amend their expectations during the process. If you are relocating from outside the metro area, it is common to have sticker shock and change your expectation of the size of home you can buy.

As a home buyer, using a Realtor and lender can help you through the process. In the end, however, it is your choice and your home. Do your home work and be prepared.