ClosingCorp Addresses Lender Concerns Over RESPA Compliance Deadline
May 4, 2010
ClosingCorp, an independent real estate information service provider, responded to mortgage lender concerns over the expiration of the four-month grace period ending April 30 for complying with the Department of Housing and Urban Development’s (HUD’s) new regulatory requirements of the Real Estate Settlement Procedures Act (RESPA).
“A survey just released by Equifax revealed that a large number of mortgage lenders have not been able to implement the technology necessary to comply with the new Good Faith Estimate (GFE) requirements of RESPA,” said Tony Farwell, founder and CEO of ClosingCorp. “Yet solutions exist, which allow lenders to provide accurate and timely Good Faith Estimates (GFEs) without having to invest millions of dollars in technology or risk violating the tolerance limits set forth in the new requirements.”
According to the survey, nearly eight out of 10 lenders say it takes longer to turn around an application since the new GFE requirements went into effect January 1 and only half say they have adapted the technology needed to implement the new rule.
“Laws, customs and costs vary greatly throughout the country and to remain competitive, national lenders must be able to access local tax information, settlement service provider lists and closing costs by market,” said Farwell. “Lenders will deliver an estimated 20 million Good Faith Estimates this year, representing more than 50 million settlement service providers, where the lender is essentially guaranteeing accurate pricing unless the service was borrower-selected.”
ClosingCorp’s new SmartGFE Service is a technology solution that provides real-time fees from local, regional and national settlement service providers in the relevant categories for sections 4 through 8 on the Good Faith Estimate. It includes title insurance, settlement services, closing attorneys, home inspections, pest inspections, appraisers, as well as transfer taxes and recording fees calculated specifically for each transaction—enabling lenders to create accurate Good Faith Estimates in minutes that meet HUD’s new mandated tolerance limits.
ClosingCorp currently is delivering data to a number of banks and is in discussion with others while offering an integrated version of its service on major loan origination platforms such as Calyx Point 7.2, as well as other key order gateways such as LPS’ RealEC.
According to Brock Cooper, Compliance Manager/General Counsel at VA Mortgage Center in Columbia, MO, a major benefit of the SmartGFE Service is its accuracy and ease of use. “The new RESPA rules create an incredible burden on lenders to accurately estimate all types of settlement costs, and the SmartGFE is the perfect resource to meet this requirement,” he said. “Not only does it provide accurate estimates of settlement services, it is also easy to use.”
On May 1, ClosingCorp introduced a compliance guarantee to lenders using the SmartGFE to ensure that data they select using the service will not result in a tolerance violation. “Our compliance guarantee demonstrates the confidence we have in the accuracy of the fees, taxes and rates in our program,” said Farwell.