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RESPA Updates Keep Coming from LOS Providers

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As the Real Estate Settlement Procedures Act’s (RESPA) deadline of Jan. 1, 2010 passed, some loan origination software (LOS) providers are maneuvering to update their compliance platforms accordingly. Just before the New Year, the industry saw a stampede of LOS providers update software packages in order to beat RESPA's deadline. Effective Jan. 1, 2010, originators must provide borrowers a Good Faith Estimate (GFE), which discloses key loan terms and closing costs to borrowers. The GFE provides pricing to the borrower early in the home buying process and it must match the HUD-1 statement, which sets in stone all payables that are due at signing. To meet RESPA and other regulation requirements, the Independent Community Bankers of America (ICBA) expanded its preferred service provider program with Wolters Kluwer Financial Services. The expansion includes the company’s RESPA products, which include training Webinars and software updates. “Over the past year, our nation’s community banks have withstood an onslaught of new regulatory requirements even though they are common-sense lenders who have always worked in the best interest of their customers,” said Dan Clancy, senior vice president of services at ICBA. The Real Estate Services Providers Council (RESPRO) developed a model GFE cost indemnification agreement and a model services agreement for its members to use. RESPRO is a national, non-profit trade association for mortgage professionals. Its model GFE cost indemnification agreement identifies responsibilities of the loan originator and the third-party settlement service provider if the final cost exceeds the new limits of the US Department of Housing and Urban Development’s (HUD) 10% tolerance requirement. HUD requires the originator to give the borrower a list of settlement service providers with the GFE, and if the borrower uses one of those providers, the cost for that service cannot exceed 10% of the estimated cost on the GFE. "RESPRO's new model RESPA agreements are designed to reduce our members' up-front legal costs when they implement HUD's new RESPA disclosures and requirements on January 1," said RESPRO executive director Sue Johnson. Mortgage Builder Software, another LOS provider, released its RESPA-compliant system as well. The updated package includes the GFE and HUD-1 forms. A viewing function allows lenders to confirm that the loan costs on the GFE are the same the borrower sees at closing. If the lender expects the amounts to differ during the loan process due to “changes in circumstances,” the lender must re-disclose a revised GFE, and the calculations must consistent on the system so the HUD-1 reflects the changes. Write to Jon Prior.

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