Home buyers are often confused about where to begin in their 
search for a home loan.  The process is usually narrowed down to 
finding which institutions provide the lowest settlement costs, 
but the different types of lending institutions and the variety 
of lending programs available can make the search a slow, 
difficult experience.

Real estate settlement costs are fees buyers normally pay when 
purchasing a home such as legal services property insurance, 
mortgage loan financing and title services.  In the past, 
consumers would have to call each lender, request an estimate 
of their settlement costs and compare all of the results to 
find which lender offered the lowest total settlement costs.

The Department of Housing and Urban Development, however, 
recently revised the Real Estate Settlement Procedures Act 
(RESPA) which now makes it easier for consumers to estimate 
various settlement costs through computer loan origination 
programs.  In this manner, consumers can access a computer 
listing of various programs offered by lending institutions.

The computer search speeds the process of reviewing various 
programs and allows participants to arrange financing with the 
listed lender.  Buyers using a computer loan origination program 
may be required to pay a fee for this service, but many buyers 
feel the convenience outweighs the cost.  Still, the new RESPA 
changes require a real estate broker with a computer loan 
origination program to inform the buyer that the service is 
only an option and that non-listed lenders may offer lower 
rates or fees.

The new Federal Regulations also permit real estate brokers to 
offer more comprehensive services to home buyers by allowing 
brokers to enter into controlled business arrangements with 
other companies associated with the home buying process.  Real 
estate brokers were always allowed to refer buyers to lending 
institutions, title companies and escrow companies, but they were 
not permitted to accept compensation from those institutions for 
giving a referral.  The RESPA changes now allow real estate 
brokers to enter into partnerships or actually open their own 
mortgage service institutions. This allows brokers to provide 
virtual “one-stop shopping” by handling the entire settlement 
process.

RESPA changes were made to help home buyers learn about and 
obtain mortgage services more conveniently.  Since RESPA helps 
consumers to understand the process of home ownership, the 
regulations may encourage more potential buyers and further 
stimulate the real estate market.