RESPA Protection with FHA Loans

 by Brandon Olson

The FHA is proposing to change the Real Estate Settlement Procedures Act to protect consumers. This is to help consumers keep down costs when they are purchasing a home and to keep fees lower and avoid price and closing cost inflation by the lenders.

The enforcement of these issues by HUD and their own reform includes issues such as:

• More competition among lenders. If lenders are forced to keep their fees low due to consumers shopping more and comparing estimates for loans, then the lenders will be forced to offer better loan terms and lower fees in order to attract business. Once this occurs these FHA lenders will need less regulation because the competition will help regulate them without intervention.
• The closing costs on loans will be fully disclosed and should barely, if at all, change upon the closing time for the loan. This allows borrowers to truly get loans that they can actually afford rather than finding out that their payments are going to be higher than expected and have financial difficulties.
• The lenders will be required to give early estimates so that the borrowers can shop for their loan and compare terms on their loan offers. This will allow borrowers to choose their best option.
• Borrowers are often confused by the costs involved with a loan and purchasing a home, and the new estimates that lenders will give borrowers will help them to understand the full costs of the loan and purchase an affordable house according to those costs.
• The final terms of the loan should be given to the borrower in a way that they can understand and agree to them prior to the loan closing.

  In the past borrowers have thought that they could afford a more expensive home because they were expecting to get a lower interest rate on their loan or did not figure in the costs for closing the loan. With the changes in this proposal the consumers will have more purchasing power because they will understand exactly what the cost of the loan will be and they will be able to purchase a home in the affordable price range for their family which will result in less foreclosures and loan defaults. Find out how much you could afford with this handy FHA loan limits calculator at FHA Mortgage Center.com.

RESPA Protection with FHA Loans

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