Loan Auditors

RESPA, or Real Estate Settlement Procedures Act, was passed in 1974 and requires that lenders provide borrowers with certain disclosures prior to closing, at closing, and after closing.

Disclosures required at the time of loan application include:

• The special information booklet
• A Good Faith Estimate
• Mortgage Servicing Disclosure Statement

These three documents are required at the time of the loan application or within three days of receiving the loan application unless the borrower is turned down for the loan.

Disclosures required before closing:

• A Controlled Business Arrangement is required when a borrower’s loan servicing company refers the borrower to a service provider with whom the lender has a beneficial relationship through ownership or other interest
• HUD-1 Settlement Statement

Disclosures required at the time of settlement (closing):

• HUD-1 Settlement Statement - RESPA entitles the borrower an opportunity to see the HUD-1 Settlement Statement one day prior to closing, but the borrower should receive it in the closing documents as well.
• Initial Escrow Statement - Shows the borrower an itemized list of estimated taxes, insurance premiums, and other charges to be paid from the escrow account within the first 12 months of the loan.

Disclosures required after closing:

• Annual Escrow Statement - As the name states, required yearly
• Servicing Transfer Statement - Required if your loan is sold

While RESPA does not prescribe penalties for failure to provide all of these disclosures, some of them do lend themselves to heavy penalties to the lender and in some cases the borrower could receive a refund on some parts of the loan or interest.

Learn more about RESPA and other lender violations.