RESPA, or the Real Estate Settlement Procedures Act, is a law that has been in place since the 1970s, and is designed to help protect homeowners during the home-buying process. In 2013, the Dodd-Frank Act was passed, which enhanced disclosure requirements found in RESPA.
If you are buying a home in Lynn, it is important that you understand your rights under RESPA, especially when you are at the closing table. Here are some things that you need to know when closing on a home in Lynn:
The Zero Tolerance Standard
One of the biggest ways that RESPA protects consumers is that it establishes different tolerance categories that regulate how much the actual settlement charges can differ at the closing table from the amount that was given to the consumer via the GFE, or good faith estimate.
There are different tolerance categories, including a zero tolerance category. Fees and charges in this category must be identical on the GFE and the final settlement at the closing table. Fees in the zero tolerance category include:
- Loan underwriting fees;
- Loan processing fees;
- State and local property transfer taxes;
- The interest rate credit or charge; and
- The adjusted origination charge.
If these things do not match your GFE while you are at the closing table, your rights under RESPA have been breached.
The 10 Percent Tolerance Standard
In addition to a zero tolerance category, there is also a 10 percent tolerance category. Items within this category can vary slightly from the original GFE, but can not differ from the original GFE by more than 10 percent. These items include:
- Recording charges;
- Title services;
- Title insurance; and
- Required settlement services by loan originator.
There are also a few items that are unregulated; these costs can change dramatically from the GFE. Items within this category include the amount of an initial escrow deposit, homeowners’ insurance costs, certain tile services, and some loan originator-required services.
Changes to Your GFE Prior to Closing
Prior to closing, the amounts on your GFE may change. However, as explained by the Consumer Financial Protection Bureau, the GFE can only be amended by your lender if:
- Your lender provides you with a disclosure at the time the original GFE is given that informs you of the lender’s right to revise the GFE; and
- There are more than 60 days before your closing date – revised GFEs cannot be issued within 60 days of closing.
Contact an Experienced Lynn Closing Attorney Today
Understanding your rights under RESPA during the closing process in Lynn can be confusing, which is one of the primary reasons that working with an experienced Lynn closing attorney is an easy way to protect your best interests. More than being convenient and financially sound, however, working with a closing attorney is also a legal requirement in Massachusetts.
To learn more about closing on a home in Lynn, the requirement to work with an attorney, and why Deborah Gold-Alexander Attorney at Law is the right choice for representation, contact our law offices today. Deborah Gold-Alexander Attorney at Law has over 30 years’ experience representing clients in Lynn and surrounding areas.