American Land Title Association
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North American Title Insurance Company is a seasoned title insurance underwriter that has been helping customers achieve the American dream of homeownership for more than 50 years. In the past several years, we have become known as the “underwriter next door,� because our associates are always easy to reach and our processes are, at all times, quick and straightforward. Our agency application process is fast and transparent for qualified agents. NATIC offers a one-hour underwriting response guarantee that is unparallelled in our industry. In addition, we value our agents based on their title industry knowledge and experience, not just on profits alone.

HUD Releases Final RESPA Rule

On November 12, 2008, HUD released its final RESPA rule. To help members understand the new rule and its implications for the title industry, ALTA hosted a “webinar” on Dec. 3 with HUD representatives Barton Shapiro, deputy director; Ivy Jackson, director, RESPA and Interstate Land Sales; and Laura Gipe, compliance specialist.

Conference participants submitted questions in advance and during the session, a summary of which follows.
The agent/underwriter split is a contractual matter, and no other line of insurance is required to disclose this information. Why did HUD make this a requirement?
The GAO report recommended this disclosure, which HUD has authority to require.

What if the settlement agent doesn't know? Is it their responsibility to get this information?
Attorneys and escrow agents are not exempt and are responsible for disclosing that information.

Who is responsible for determining if tolerances have been exceeded?
The settlement agent must list items on the GFE that were provided by the lender, run the calculations, and determine if tolerances have been exceeded. It is then the responsibility of the lender to reimburse the borrower.

Who contacts the lender for a reimbursement?
Either the settlement agent or the borrower can do it. The lender will want to respond within 30 days because HUD will be conducting regular audits.

So the borrower or settlement agent contacts the lender, and the lender says it will take care of it within 30 days. In order for the HUD-1 to compare to the GFE, do we have to redo the documents, and, if so, who pays for the second settlement?
You only need to reissue the HUD-1, which doesn’t require signatures. Both the lender and borrower get a copy of the new HUD-1. This should encourage greater communication between the lender and settlement agent because it’s better to have the information up front so you don’t get into technical issues.

If the lender reimburses the borrower directly and doesn’t notify the settlement agent, is the agent still responsible for the new HUD-1?
If you don’t know about it, you’re not responsible, but the lender is going to want a new HUD-1 in case the regulator pulls the file.

Recording fees aren’t known until the actual documents are recorded. If the lender estimates them at $100, and they are actually $200, is the lender responsible for the overage?
If the lender provided the estimate then the lender is responsible, but this is one of the items that can be averaged if the lender is using this mechanism.

We didn't see signature lines on the HUD-1. Was this a mistake?
There is no statutory requirement for signatures on the HUD-1.

For cost averaging, can you better define what a category is? Is it a city, county, state?
The settlement service provider determines the class of service, geographic area, and the type of loan, limited to a specific time frame, and establishes an average cost or charge.

Where are attorney’s fees disclosed on the GFE and HUD-1?
If the attorney is the closing agent, fees are included in the settlement charges. If the seller has an attorney, the charge is listed outside the column but itemized in title charges. If the borrower is bringing an attorney to the table in addition to the settlement agent, it would be listed under miscellaneous. Transfer taxes vary by local jurisdiction.

What if the lender doesn't know them and doesn't include them on the GFE? Is this the responsibility of the lender or the settlement agent?
It’s the responsibility of the lenders to know what those are. If they aren’t sure, they should find out.

If there is a change because a municipality raised its fees, is the lender allowed to issue a new GFE?
If it exceeds the tolerance, the lender will want to issue a new GFE

To avoid mistakes in transferring information to the HUD-1, should settlement agents require lenders to fill out that form?
Lenders may choose to, but it’s the settlement agent’s responsibility to transfer the information, the same as it’s done today.

Since there is tremendous responsibility on the lenders, wouldn’t they want to steer everything to an affiliated business to avoid mistakes?
The lender will want to steer business to settlement agents who provide good service, accuracy, and communication.

If a mortgage broker filled out the GFE, who is responsible for overages?
If the lender accepts the GFE, then the lender is responsible.

Do the same tolerances apply to seller’s charges or just the borrower’s?
The GFE requires that charges be listed that the borrower paid. Things that the seller agrees to pay must still be listed for comparability, but then shown as a credit.

If the borrower chooses the title company, is the lender responsible for meeting the tolerance?
If the borrower chooses the provider, the lender is not responsible.

RESPA Related Headlines

RESPA Final Rule Posted ALTA Responds to RESPA Announcement

Full Summary of RESPA Final Rule [PDF]

HUD Issues New Mortgage Rules to Help Consumers Shop for Lower Cost Home Loans
New 'Good Faith Estimate' will help borrowers save nearly $700

Special Event

ALTA Hosts Webinar on New RESPA Rule
December 3, 2008
On Wednesday, ALTA hosted a webinar on the new RESPA rule, featuring senior HUD staff. Ivy Jackson, Director, RESPA and Interstate Land Sales, Barton Shapiro, Deputy Director, and Laura Gipe, Compliance Specialist joined Kurt Pfotenhauer and Ed Miller in an explanation of the new rule and its effects on the title industry. They answered questions submitted by conference participants. The audio and web presentation is available at ALTA's website on the RESPA resource page.

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How To Find Us:
American Land Title Association
1800 M Street, NW, Suite 300S
Washington, D.C. 20036-5828
P. 202.296.3671 F. 202.223.5843
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