In Georgia, all real estate closings must, by law be handled by a licensed real estate closing attorney who represents the lender, not the buyer or seller. Even though brokers do have certain important responsibilities in a real estate closing, they cannot prepare the legal documents or conduct the closing.
Even though some state laws do differ, the Real Estate Settlement Procedures Act (RESPA) is a federal law that applies across the board. In Georgia it is a law that is followed in conjunction with the Georgia real estate license law that is administered by the Georgia Real Estate Commission.
Additionally, there are recent changes to federal legislation that was implemented by the Consumer Financial Protection Bureau (CFPB) last year (2015), that affect several closing forms and disclosures that are now obsolete. Specifically, two forms – a loan estimate and a closing disclosure form – replace four previous forms:
- The Good Faith Estmate (GFE) that listed mortgage loan information and its terms
- The Truth-in-Lending (TIL) form that disclosed information about finance charges, annual percentage rates, and the payments that would be due on loans
- The Truth-in-Lending Act (TILA) final disclosure document
- A Department of Housing and Urban Development (HUD) settlement statement, Settlement Statement, that listed all charges and credits due to or by buyers and sellers
About Chapter 47
Chapter 47 of the Georgia real estate license law lays out the procedure to be followed for settlement of an agreement between borrowers (buyers) and lenders of residential first mortgage loans. It also states what the real estate closing attorney, as well as brokers, buyers and lenders must do in relation to both Georgia laws and RESPA.
The most important concerns covered by RESPA relate to
- Settlement costs
- Closing disclosures
- Prohibition of kickbacks to any of the professionals involved in buying and selling real estate
Settlement Costs of Real Estate Loans
Within three business days of applying for a first mortgage loan for residential property, lenders must provide the buyer with the loan estimate form that combines the old GFE (which was a good faith estimate of what settlement services were going to cost) and the initial TIL form.
Lenders are also responsible for providing buyers with RESPA’s special information booklet, Shopping for Your Home Loan: Settlement Cost Booklet within three days of a loan application. This spells out the settlement process and the types of charges (rather than amounts) that borrowers will have to cover. It also has some useful sample questions that borrowers can use to get more information from the lender, the real estate closing attorney, and others who may be involved in settlement. Amongst other things, it explains how people borrowing money to finance a home can continue to shop around for settlement services until settlement is underway.
Unfair and illegal practices are also highlighted to warn borrowers about their legal rights.
Closing Disclosures About Real Estate Loans
A closing disclosure document (which is a combination of the old Settlement Statement and final TILA document) is used to finalize all real estate loans. It must be given to the purchaser three days (or more) before the consummation of the mortgage loan.
While it is the real estate closing attorney who prepares the closing disclosure documents, lenders are obliged (by law) to keep the loan estimate statement for three years, and closing disclosure documents for five years. Brokers also have to keep statements – and all the other documents relating to the sale – for a certain length of time.
Kickbacks Are Not Allowed
Kickbacks to settlement services providers (including the real estate closing attorney) in the form of cash, unearned fees, or goods of value are strictly prohibited by RESPA. Even free lunches and advertising or marketing goods are totally illegal!
Do You Need a Peachtree Attorney to Get Your Mortgage Loan?
Apart from the real estate closing attorney who will play a pivotal role in the closing process once you have got a loan, you might want to consider hiring an attorney to review your sales agreement and look after your interests. Very often attorneys also review draft copies of closing documents before the real estate closing.
Remember that a real estate closing attorney will be representing the lender; you might want a knowledgeable Peachtree City attorney to represent you. If so call Slepian, Schwartz & Landgaard for more information. We have your interests at heart.