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New RESPA plan awaits CU comments
WASHINGTON (3/28/08)—It has been a long wait, but the Department of Housing and Urban Development (HUD) has issued its revised proposal to amend Real Estate Settlement Procedures Act (RESPA) rules. HUD has been working since the late 1990’s on revising its rules implementing the 1974 RESPA law with a view to improving the mortgage process and to lower settlement costs for borrowers. The current proposal supplants one issued in 2002, scrapped by HUD after the Credit Union National Association (CUNA) and others noted that some of the proposed changes could be confusing to consumers and could have the opposite effect of the intended simplification. CUNA seeks credit union comment by May 2 on the on the recently issued proposed RESPA changes. HUD will accept public comment until May 13. The proposed rule would make significant changes to the Good Faith Estimate (GFE) form, resulting in a new format for the GFE. That change is intended to ensure that the estimates are more accurate and to facilitate consumer comparisons between lenders. These changes will also facilitate comparisons between the GFE and the HUD-1 or HUD-1A settlement statements. HUD also proposes to ensure that borrowers are aware of the final loan terms and costs at settlement by requiring lenders read to each borrower a copy of a “closing script” containing the information. The proposal would also clarify when it is appropriate to provide borrowers with discounts and average price costing of settlement services. The 2002 proposal would have permitted lenders to provide a package of settlement services that would have guaranteed a lump-sum price for all loan originator and government-required settlement costs associated with obtaining a mortgage, along with a guaranteed interest rate. CUNA and others strongly opposed this as it would have disadvantaged smaller lenders, and it is not included in this latest proposal. Use the resource link below for more on the RESPA proposal and to read CUNA’s comment call.
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