What is Title Insurance?
Title insurance is a protection against the risk of financial harm that arises from claims against the rights of ownership of real property. It also insures the accuracy and sufficiency of the title examination. Claims could arise from: forgery, improper transfer of ownership, mistakes, fraud, and unknown heirs with rights to the property. Title insurers will settle claims, prosecute any act or proceeding which would be necessary to protect the interest of the property, and protect the financial interest of the party insured.
Who is the Settlement Agent?
The settlement agent is the person responsible for conducting the real estate closing and the disbursement of the settlement proceeds.
What is the Real Estate Settlement Procedures Act (RESPA)?
The Real Estate Settlement Procedures Act (RESPA) is a federal statute enacted by the Department of Housing and Urban Development (HUD) to regulate and monitor real estate settlement procedures. The statute was passed in 1974, to help all parties involved in the real estate transaction to be fully aware of closing costs, lender servicing, lender escrow account practices, and any business relationship between settlement providers and the parties involved in the transaction. The statute covers one to four family residences which includes mortgages, assumptions, home improvement, and home equity lines/loans.
The purpose of RESPA is to assist consumers when making important financial decisions. RESPA requires Lenders, Brokers, and Settlement Agents to provide certain documentation to the borrower prior to or at closing. They include:
~Disclosure of any premiums paid by the lender to any third party
~Good Faith Estimate of closing costs
~Mortgage servicing disclosures on the lender’s intention of servicing or transferring a mortgage loan
~Disclosure of settlement service providers
~Disclosure of any affiliated business relationships between the parties involved in the transaction
~Initial escrow disclosure on the handling of the consumer’s funds in an escrow account for the purpose of paying real estate taxes insurance premiums, and other charges
