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New RESPA rules unveiled
WASHINGTON (11/13/08)—The U.S. Department of Housing and Urban Development (HUD) Wednesday announced final rules implementing its overhaul of Real Estate Settlement Procedures Act (RESPA) provisions. The changes, years in the making, are meant to simplify and improve disclosure requirements for mortgage settlement costs. Jeffrey Bloch, senior assistant general counsel of the Credit Union National Association (CUNA), said there are a few beneficial changes in the final rule from an earlier proposal, which will be good news to credit unions. Dropped from the final, Bloch said, is a cumbersome requirement that would have made settlement agents read a “closing script” of disclosures to a borrower at the closing table. CUNA strongly opposed this provision for a number of reasons, including the presumption that all individuals would prefer to receive the information in this manner. CUNA also was concerned that some might be insulted by a process in which information is read to them, with the possible implication that they are incapable of reading it for themselves. Also different from the proposal, the final RESPA rule will give lenders and settlement service providers 30 days to correct potential RESPA violations. Originally, HUD proposed a 14-day period. CUNA supported a longer timeframe. “Also, the Good Faith Estimate (GFE) is now three pages instead of the proposed four pages. In our comment letter, we opposed going from the current 1 page to 4 pages as this would be more confusing to borrowers. We welcome this slight improvement in the final rule,” Bloch said. Lenders will not be required to use the new GFE until 1/1/10. The final rule is expected to be published in the Federal Register Friday. CUNA will continue its review of the final rule and provide more analysis after close scrutiny of the details. Use the resource links below for more information on the RESPA rules.
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