Closing Process –Fees and Expenses 9 costs in book –Prorations, Escrow costs, Others Property tax PMI Hazard ins Mortgage cancellation ins Title insurance Release fees, attorney fees, pest inspection, commissions, recording fees, transfer tax
RESPA Act –A uniform set of procedures and documents –7 pieces of information
Settlement costs –Truth in lending requirement Since 1968 Require lenders disclose to borrowers financial information contained in loan agreements in a uniform manner For borrower to compare different loans Not applicable to commercial lending E.g. APR (Exhibit 11)Exhibit 11 –APR is an effective rate, but under a specific compounding frequency (monthly here).
Settlement costs –Truth in lending requirement ARM requires more than FRM APR is more difficulty to compute Exhibit 12