It is very important that you receive the following documents and get them to your     PHLA™ as soon as you receive them!

What should you receive?

1. Good Faith Estimate of Settlement Costs (GFE)
2. Truth-In-Lending Disclosure (TIL)
3. Settlement Statement (HUD-1)
4. Servicing Disclosure Statement
5. Affiliated Business Arrangements
6. Escrow Account Operation and Disclosure
7. Special Information Booklet

Good Faith Estimate of Settlement Costs (GFE): 

You should receive this disclosure within three (3) business days of applying with a lender.  RESPA requires that, when you apply for a loan, the lender or mortgage broker give you a Good Faith Estimate (AKA your "GFE") of charges and fees you will likely have to pay. If you do not get this Good Faith Estimate when you apply, the lender or mortgage broker must mail or deliver it to you within the next three (3) business days.  Unfortunately, latest statistics show that only 1 of 4 home loan applicants actually receives this document prior to their loan closing.  You MUST get this document in order to shop and compare quotes from mortgage lenders!

However, it is also important that you understand that the amounts listed on the GFE are only estimates.  Remember that the lender's estimate is not a guarantee. Currently the laws do not require that your lender actually deliver the terms they are disclosing to you.  However, some relief is coming here.  HUD (U.S. Department of Housing and Urban Development) announced RESPA reform on November 12, 2008.  All lenders have until January 1, 2010 to comply.

Truth-In-Lending Disclosure (TIL): 

Federal law requires lenders to proivde this to you within three (3) of your loan application.

This disclosure will contain five primary boxes:

1. Annual Percentage Rate (APR)
2. Finance Charges
3. Amount Financed
4. Total of Payments
5. Payment Schedule

Settlement Statement (HUD-1):  

You should receive this disclosure within no less than 24 hours of your loan closing.  This statement itemized the fees that are being charged to you and the corresponding services provided.  One (1) business day before you close your loan, you have the right to inspect the HUD-1 Settlement Statement. This document is very important.  And, unfortunately similar to the GFE, very few borrowers report being given the opportunity to review this document prior to the actual loan closing. This form is filled out by the "settlement agent" who will conduct the loan closing. Typically this will be a title company or attorney.  Be sure you have the name, address, and telephone number of this settlement agent and let them know you will want to inspect this form at least 24 hours prior to the loan closing. The fully completed HUD-1 Settlement Statement generally must be delivered or mailed to you at or before the settlement. In cases where there is no settlement meeting, the escrow agent will mail you the HUD-1 after settlement, and you have no right to inspect it one day before settlement. 

Servicing Disclosure Statement:

You should receive this disclosure within three (3) business days of applying with a lender.  RESPA requires that the lender or mortgage broker tell you in writing, when you apply for a loan, or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments).  Review our section on Lender Types.  A "mortgage broker" does not service their loans, and therefore, your loan will be closing in the name of the lender who will be buying your loan.  It is important that you know this may not ultimately be the lender who is servicing your loan.  If your lender is a "mortgage banker", they will be closing your home loan in their name.  You will want to ask them who they intend to sell your loan to.  Your lender will most assuredly know who they are selling the loan to when you are closing.

Affiliated Business Arrangements:

You should receive this disclosure within one (1) business day prior to closing your loan. When a lender, real estate broker, or other participant in your home loan refers you to an affiliate for a settlement service (such as when a real estate broker refers you to a mortgage broker affiliate), RESPA requires the referring party gives you an Affiliated Business Arrangement Disclosure. This form will remind you that you are generally not required, with certain exceptions, to use the affiliate and are free to shop for other providers.  While the parties you are working with will "prefer" that you close with one of these affiliates, you must remember you have complete freedom to choose who you use as a lender, real estate agent, settlement service, title, and appraiser.

Escrow Account Operation & Disclosures:

You should receive this disclosure within one (1) business day prior to closing your loan.  Your lender may require that you establish an "escrow" or "impound" account to insure that your real estate taxes and home owners insurance premiums are paid on time. If so, you will probably have to pay an initial amount with the loan closing to start the account, and an additional amount will be included in each month's regular mortgage payment. Your escrow account payments may include a "cushion" or an extra amount to ensure that the lender has enough money to make the payments when due. RESPA limits the amount of this cushion to a maximum of two months of escrow payments.  Most lenders are very good about refunding excess escrow balances by reducing your payment, but it is a good idea for you to keep an eye on this.

At the loan closing, or within the next 45 days, the person servicing your loan must give you an initial escrow account statement. That form will show all of the payments which are expected to be deposited into the escrow account and all of the disbursements which are expected to be made from the escrow account during the year ahead. Your lender or servicer will review the escrow account annually and send you a disclosure each year which shows the prior year's activity and any adjustments necessary in the escrow payments that you will make in the forthcoming year.

Special Information Booklet:

You should receive this disclosure within three (3) business days of applying with a lender if your transaction is for the purchase of a residential property.

Additional Information:

If the lender turns down the loan within three days, however, then RESPA does not require the lender to provide these documents.

The RESPA statute does not provide an explicit penalty for the failure to provide the Special Information Booklet, Good Faith Estimate or Mortgage Servicing Statement. However, bank regulators may choose to impose penalties on lenders who fail to comply with federal law. Please read the section on RESPA enforcement for more information.