{"id":369087,"date":"2016-04-04T10:47:12","date_gmt":"2016-04-04T15:47:12","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/realestate\/buying-a-home\/respa-the-good-faith-estimate-and-the-hud-1-form.html"},"modified":"2024-04-03T15:40:42","modified_gmt":"2024-04-03T20:40:42","slug":"respa-the-good-faith-estimate-and-the-hud-1-form","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/realestate\/buying-a-home\/respa-the-good-faith-estimate-and-the-hud-1-form.html","title":{"rendered":"RESPA, the Good Faith Estimate, and the HUD-1 Form"},"content":{"rendered":"\n
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RESPA, the Good Faith Estimate, and the HUD-1 Form<\/h1>\n
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\n By Melissa McCall, J.D.<\/a> | Legally reviewed by Katrina Wilson, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Compared to the price of a home, the closing costs (settlement costs) may seem minor. However, settlement costs can equal about 5% of the total cost of the house. Borrowers must ensure they receive a competitive price for the settlement costs when financing a new home.<\/p>\r\n

Lenders must disclose<\/a> certain information about closing costs<\/a>, including a loan estimate and the closing statement. These estimates and statements help borrowers select the right mortgage loan for them.<\/p>\r\n

This FindLaw article looks at the Real Estate Settlement Procedures Act, the Good Faith Estimate, and the HUD-1 Form.<\/p>\r\n

What is the Real Estate Settlement Procedures Act?<\/h2>\r\n

The Real Estate Settlement Procedures Act<\/a> (RESPA) is a federal consumer protection statute. It does not govern the amount of your closing costs, but it does ensure that consumers receive accurate information about their home loan costs. While RESPA has many provisions, the two of particular interest here concern disclosures for borrowers.<\/p>\r\n

The specific disclosure related to settlement costs involves a lender’s loan estimate of the total settlement costs. New rules issued under RESPA require lenders to give a loan estimate within three business days of receiving a loan application<\/a>. Lenders must provide a borrower with the closing disclosure forms at least three business days before closing the loan.<\/p>\r\n

RESPA Prohibitions on Lending Practices<\/h3>\r\n

RESPA prohibits certain lending practices that can drive up closing costs. These practices include kickbacks for mortgage settlement referrals or requiring that borrowers purchase title insurance<\/a> from certain title companies.<\/p>\r\n

RESPA Enforcement<\/h3>\r\n

The U.S. Department of Housing and Urban Development<\/a> (HUD) enforced RESPA until 2011 when the Consumer Finance Protection Bureau took over enforcement<\/a>.<\/p>\r\n

Federally Related Mortgage Loans<\/h3>\r\n

RESPA<\/a> applies to all federally related mortgage loans and aims to ensure consumers understand their settlement costs.<\/p>\r\n

Federally related mortgage loans must meet the following criteria:<\/p>\r\n