RESPA - Real Estate Settlement and Procedures Act

RESPA is the abbreviation for the “Real Estate Settlement and Procedures Act" which is a set of regulations passed by Congress in 1974. The act is designed to clarify prices for settlement services required by Purchasers of residential real estate. The Act has recently been modified by a requirement that settlement costs on the HUD-1 settlement statement be directly tied into costs disclosed on the Good Faith Estimate (GFE) provided by the mortgage lender during the Buyer’s mortgage application process. Mortgage lenders are required to charge Buyers at settlement the exact amount for origination and discount points as were disclosed on the GFE. They must also accurately disclose the transfer taxes to be paid by the Buyer. If these charges are more than the charges on the GFE, the excess monies must be refunded by the mortgage lender to the Buyer. Required settlement services such as appraisal, credit report, flood cert fees, government recording charges, if selected and required by the Lender, must not total more than of 10% greater than the GFE or else the excess of these costs must be refunded to the Buyer. Because of the importance of accurately disclosing costs for the recording and transfer taxes, the following tables are provided.

Recording Costs

Recording costs for most municipalities in the southeastern part of Pennsylvania are based on the type of instrument (usually a deed and a mortgage) and the number of pages to be recorded. The usual number of pages for a Deed is 4 and for a standard conventional mortgage 18 pages. FHA Mortgages are often 12 pages.

         County                          Deed               FHA Mortgage          Conventional Mortgage

         Berks                            54.50                    86.50                            110.50

         Bucks                           60.00                    76.00                             88.00

         Chester                        65.00                     97.00                            121.00

         Delaware                      82.50                    112.50                           136.50

         Lancaster                     53.50                     69.50                              81.50

         Montgomery                 78.50                     110.50                           134.50

         Philadelphia                 200.00                   170.00                           170.00

Real Estate Transfer Taxes

Real Estate Transfer Taxes are taxes that are due when real estate title is conveyed. The fees are paid when the deed is recorded. Most municipalities in the southeastern part of Pennsylvania charge a total of 2% of the purchase price, 1% going to the State of Pennsylvania and 1% going to the municipality. By custom the transfer taxes are normally split between Buyer and Seller with each party paying ½ of total. There are a number of Municipalities that charge more than 1%. Below is a list of those municipalities:

Municipal State Total

Berks County City of Reading 4 % 1% 5%

         Chester County                Coatesville                           2 %                   1%               3%
                                               Tredyffrin                            1 ½ %              1%               2 ½ %

         Delaware                         Radnor                               1 ½ %               1%               2 ½ %
                                               Upper Providence                 1 ½ %               1%               2 ½ %

Philadelphia Philadelphia 3% 1% 4%