The 2010 RESPA Final Rule made one big change to real estate transactions: the GFE-HUD comparison. If you are still using old, non-compliant software you are at best wasting a lot of time preparing comparisons between the Good Faith Estimate and the HUD 1 settlement sheet, and at worst flat out violating the law.
The Need for RESPA Software
The GFE-HUD comparison sheet was part of the 2010 RESPA law and was intended to make it easier for buyers and sellers to understand exactly how much a given real estate transaction was going to cost. Although the intent of the law was good, the reality is it made things a lot harder for real estate agents and attorneys. Tracking all the involved charges and making sure they fall within RESPA tolerances slows down the closing process.
This is one of many reasons it’s nearly impossible to run a profitable real estate practice without dedicated software. The software not only speeds up preparation of the HUD 1 statement but also makes it easy to generate the REAPS-required GFE-HUD comparison sheet. You can ensure you don’t run outside of tolerances and can print the sheet for your clients.
Itemizing Without Itemizing
One of the criticisms of the 2010 RESPA Final Rule is that it forces real estate agents to lump fees together to make things less confusing for consumers. It is debatable that giving people less information makes them more informed consumers, but the law is the law. The problem with the law is that many people involved with a real estate transactions — including the consumers! — often want to see each fee itemized.
Real estate agents are then left with the demand for itemization and yet the requirement that they don’t. The use of title closing software gives the option of itemizing within the program and yet producing the REAPS-complaint lumped charges. The agent produces itemization for those who want it, without violating RESPA rules.
Who Paid What?
Another simplification under RESPA is the fact that all GFE charges are listed in the borrower’s column regardless of who paid them. Sometimes it’s important to know if the lender or the seller paid them, but the GFE doesn’t include the ability to track this. Once again, dedicated software gives the functionality real estate agents need while still observing the law.
Real estate agents can use the software to track who paid the fees. When the GFE is generated, then the fees can all be listed in the borrower’s column as required. However the charges can be listed on the HUD 1 to correctly assign fees paid by the seller or the lender. This of course could be done by hand, but tracking all these fees is confusing and prone to error.
As real estate laws get more complicated, agents and attorneys are left needing software to do their jobs. Real estate and legal practice management software is no longer a luxury; it is a necessity in a well-run practice.
Learn more about Easy HUD, our real estate software solution for attorneys.