The Real Estate Settlement Procedures Act (RESPA) began 2010 with various changes in its lending policies, most of which are intended to curb mortgage fraud and prevent more homeowners from falling into default. But as with any other change, experts are seeing a mix of pros and cons in the new RESPA policy. Some of them are particularly of concern to Laguna Beach real estate, as it can affect the way financing is assessed and granted for luxury homes. Read on to learn more about how RESPA rules can affect Laguna Beach realty in 2010.

Lender disclosure

The most significant change in the policy has to do with transparency the root cause of most mortgage fraud issues today. Under the new rules, real estate Laguna Beach lenders and brokers are required to give clients a Good Faith Estimate (GFE) disclosing the terms of the loan, including the closing costs. The closing agent will also have to provide the borrower with a Settlement Statement, issued by the HUD, which allows the latter to compare estimated and final costs.

The changes were actually put in effect in January 2009. However, the HUD decided to set a one-year transition period to allow mortgage servicers to implement them. The time is now up and the rules are in practice, but whether or not it has benefited Laguna Beach real estate remains to be seen.

More work for lenders

The RESPA change puts much of the responsibility on real estate Laguna Beach lenders, who must provide the paperwork to their borrowers. This means that the financing process, as well as the purchase itself, may be slowed down. As a borrower, you will also have more terms to read through and understand to make sure you are getting your moneys worth. This is why experts highly recommend working with an experienced realtor: not only will they offer more prospects, they will also have the Laguna Beach realty knowledge to help you get the financing you want.

Truth in Lending statement

Lenders are also required to provide a truth in lending statement before collecting any money from the borrower, whether it is for loan processing, appraisals, or other steps in the purchase process. Credit report fees may be charged only after the first TIL is delivered. Borrowers are given a time frame, usually around seven days, to read through the document and make sure it complies with Laguna Beach realty standards. If there are any discrepancies, the lender usually has 30 days to correct it and issue a different TIL.

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