DC Real Estate RESPA/Settlement
What Is RESPA?
RESPA is the Real Estate Settlement Procedures Act. Read about it here
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What Is Settlement?
Settlement is the "closing" of a real estate transaction. Your settlement company will use its knowledge of real property laws, contacts in the offices of the Recorders of Deeds, Courts, and Surveyors' offices, and the information provided by the parties to the transaction to assemble and review the pertinent documentation then effect a title transfer.
When a buyer and seller ratify (both parties have signed) a sales contract, the settlement company is sent a copy of the contract along with contact information for the buyers and sellers. They'll order a title report to review for title issues (called "clouds"), a property survey if the property is a single-family home, and a certificate of property insurance. They will generate a payoff letter for the sellers' mortgage loan if one exists, and compile all other relevant material necessary for the title company to insure the buyers' new title to the property.
A day before settlement your real estate agent should request a "preliminary HUD1" which is a draft of the HUD-1 settlement statement. It will be a draft because many of the important numbers are finalized on the day of settlement. This is reviewed for errors such as name spellings, addresses, and make certain that all the credits you're supposed to have are on the statement. The preliminary HUD-1 should be very close to the actual HUD-1 in terms of data.
More About DC Real Estate RESPA/Settlement
It's a good idea to perform the final walk-through of the property on the morning of settlement to make sure all contract items are as agreed and that the condition of the property is as it should be. Then you'll go to the settlement company office, review your draft of the "HUD-1" settlement statement and obtain a certified check from your bank or credit union, made payable to the settlement company (as they direct for the exact amount needed to close). If the check exceeds what is due at the table, the settlement company will issue a check back to you (the buyer), or if you (the buyer) are short in a minor amount due to corrections the morning of settlement, they'll accept your personal check.
In addition to collecting the buyer's closing funds at the settlement table, the settlement agent will prepare, have signed, and transfer the deed and all related affidavits from the seller to the buyer, pay all brokerage commissions, taxes, liens, recording fees and other charges, and cause the recording of the buyers' new deed. They will adjust to the day of closing the real estate taxes, condominium assessments, rents and security deposits (if any) between the parties, release the balance of the sellers' proceeds to them, and issue the owners' and lenders' title insurance policies.
Updates to DC Real Estate RESPA/Settlement
In January, The CFPB (Consumer Financial Protection Bureau) tested two different designs for these closing disclosures in Philadelphia, PA (named Butternut and Hemlock) and are now working to apply input from the testing in Philadelphia to improve all forms.
The CFPB (Consumer Financial Protection Bureau) is working on new real estate mortgage closing disclosure form that would combine TILA and RESPA disclosures for borrowers. See the draft models at http://www.consumerfinance.gov/knowbeforeyouowe/
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