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CUNA urges HUD to fix RESPA rules

WASHINGTON (5/16/08)—The Credit Union National Association (CUNA) believes proposed rules to streamline RESPA are likely to have the opposite effect. The changes were recommended by the Department of Housing and Urban Development (HUD).

CUNA said the HUD recommendations would make the settlement process more complex and inconvenient for the mortgage buyer. It made the observation in a letter to the housing agency.

The letter said CUNA was especially concerned about the proposal to increase to four pages from one page the Good Faith Estimate (GFE) form. "This will not benefit borrowers, who we feel, will be confused, overwhelmed, and possibly intimidated by the additional information," the letter said.

CUNA also stressed that whatever GFE form HUD finally adopts should include the annual percentage rate as required information. It said this would be helpful to borrowers who want to compare loan terms with other lenders.

The letter also questioned the wording of a proposed rule that would require certain settlement costs on the GFE to be accurate within certain thresholds, unless there are "unforeseeable circumstances."

"CUNA requests clarification that 'unforeseeable circumstances' include circumstances that are unforeseeable by the lender, even if they are foreseeable by the borrower," the letter added.

Other points in the RESPA letter:

• The proposal to allow lenders to remedy violations by reimbursing borrowers for closing costs above the required threshold has merit, although we believe lenders should have 30 days, rather than the proposed 14 days, after closing to provide the reimbursement;

• A requirement that lenders must ensure borrowers receive a notice of loan rejection within one day after the decision is not sufficient time to allow the lender to verify the borrower has received the notice; and

• CUNA urges HUD to coordinate with the Federal Reserve Board to ensure that it is consistent with related mortgage loan regulations to be revised by the Fed.

Resource Links

CUNA Comment Letters