The Department of Housing and Urban Development is taking an enforcement action against a "large" lender that pressured title agents to cover settlement costs that exceeded the amounts disclosed on the good faith estimate.
Under Real Estate Settlement Procedures Act rules, if closing costs end up exceeding the estimate given to loan applicants, the lender has to reimburse borrowers for every dollar above set tolerances. "The large lender was sending out demand letters and invoices to title agents for reimbursements for tolerance cures" and threatening to deny them future business if they didn't pay, Laura Gipe, a Respa specialist at HUD, told a Tuesday meeting in Washington of the American Land Title Association. (HUD wouldn't identify the lender).
"I am happy to report that very soon all of those who have been removed from the [lender's approved] list for failure to pay will be restored," Gipe said to the cheers of a few title agents. The lender will also reimburse agents that paid the "cures."
