The first sweeping change in the home buying process since 1974

January 1, 2010, the new and improved Real Estate Settlement Procedures Act of 1974 (RESPA) began. Considering this is the first sweeping change in the home buying process since 1974, it is worthy of our full attention. The new RESPA means more than new forms-it means major changes in the way real estate closings happen.

The key motive of RESPA’s new rules is to make sure consumers understand loan costs and binding parameters before singing the closing statements.

With mountains of paperwork at the closing table, there is little chance that borrowers are going to spend the many hours necessary to wade through the documents. What’s more, borrowers, especially would-be first-time homeowners, may be intimidated by the process and miss the opportunity to seek competing settlement services that could save them money.

RESPA wants to make it easier for borrowers to shop for the lowest-cost, most convenient closing services by mandating borrowers receive a written list of settlement service providers. That comprehensive list includes closers, appraisers, real estate brokers, title examiners, attorneys, underwriters, pest inspectors, mortgage insurers, loan processors and other settlement service providers.

Since borrowers will receive a laundry list of competing settlement service providers, they may be inclined to shop around for the best price, even if it only means saving a couple of hundred dollars.

This is the crux of the matter as it relates to real estate practices and comes in the wake of industry abuses. Some in the real estate industry have received kickbacks for referring consumers to mortgage brokers, appraisers and other professionals along the road to homeownership. In some cases, those referrals may not have been in the best interest of the homeowner based on price or serviced provided. In other cases, the real estate agency owned the title firm or the appraisal firm at non-competitive prices.

The good news is, HUD announced that that it will be lenient in the first 120 days of enforcement of the new RESPA regulations going into effect January 1, 2010 so long as good faith efforts are made to comply.

For more information on building, buying, selling or leasing commercial or residential property anywhere in the world, contact Nicole Tucker, licensed agent with Keller Williams, Dallas Preston Road office at 972-992-8204 or visit my website at http://www.NicoleRE.com.
Nicole Tucker ~ Making Real Estate Real Easy!