The Real Estate Settlement Procedures Act (RESPA) was formed under “Regulation X” in 1974. Like our page on TILA here is a more simple explanation on RESPA. If you want the real legal breakdown, visit the various government websites. This is only going to be a basic street-talk breakdown. The RESPA notice or disclosure, is delivered in one of two basic formats. The first, is the older format that most consumers remember as the disclosure form or good faith estimate (GFE) and a few other pages that went along with the GFE. This older format is still used in the mortgage loan industry for financing with reverse mortgages, land purchases, commercial type loans, and investment properties.
The RESPA forms were mashed together with the TILA form which created TRID (TILA RESPA Intergraded Disclosure). This disclosure was supposed to be simpler for the consumer to understand over the older forms. However, it has proved to be overwhelming for the first home buyer, the figures are ubiquitous and most people do not even read all of the pages.
First the GFE or TRID contains a list of items with an estimated cost of each item you will be paying for as a result of attaining a mortgage loan in conjunction you real estate transaction. These costs have tolerance levels that are subject to review by state and federal regulators during an audit or if a complaint by the consumer is filed.
RESPA requires you mortgage broker and licensed real estate agent to provide you with certain disclosure in a timely manner. Never sign a disclosure without putting the actual date by your signature. These required disclosures are time sensitive. If the licensed real estate agent or loan originator fails to disclose in the required time frame, they may be subject to fines and penalties. Today, most everyone is using some type of electronic signature system. (E-Sign) This helps keep everyone compliant and honest to the public.
Under RESPA, all professional parties involved in the transaction are supposed to disclose their relationship, and if there is any affiliation or benefit paid to one or another licensed professional, in regards to the transaction.
With TRID all the key licensed professionals involved with the transaction are listed on your CD (closing disclosure) including their license number. To learn and understand more about TRID, visit our TRID web page.
For a complete legal explanation of TRID, RESPA and TILA please visit the visit the federal government website sites.