The Department of Housing and Urban
Development (HUD) recently approved a final rule that completely
overhauls the requirements of Regulation X, the implementing
regulation for the Real Estate Settlement Procedures Act (RESPA).
The changes are huge and the impact on your institution will be
substantial. The effective date is January 16, 2009, but most of the
new requirements are delayed until January 1, 2010.
We will have the new forms
available on January 16, 2009.
HUD's goal is to simplify and
improve disclosure requirements for mortgage settlement costs under
RESPA. HUD seeks to make the process clearer, more useful and
ultimately less costly for consumers. Most of the major disclosures
currently required are significantly revised and new disclosures,
procedures and restrictions are added. HUD's current RESPA rules do
not facilitate shopping or competition to lower costs. HUD estimates
that the changes will result in a settlement costs reduction to the
borrower of $500 to $600 per loan.
The changes are huge and the impact
on your institution will be substantial. HUD estimates costs to the
industry will be nearly a $1 billion per year (about $73.40 per
loan). New forms and procedures will be needed by all lenders. Every
lender must understand the changes and the impact they will have on
your mortgage lending operations.
Highlights
-
The new three-page Good Faith
Estimate form and the new instructions for preparing the
form;
-
The new three-page HUD-1, the
new two-page HUD-1A and the new instructions for preparing
both forms;
-
The revised Servicing
Disclosure Statement and new timing rule;
-
The new limitations (0% for
certain charges and 10% for others) for amounts that appear
on the HUD-1/1A compared to the GFE; New defined terms, such
as "application", "changed circumstances" and "Tolerance";
-
The new credit or charge for
the specific interest rate chosen;
Limitation on charging a fee for an appraisal, inspection,
or similar charge prior to providing the GFE;
-
The new average cost pricing
method of disclosing costs on the HUD-1/1A;
-
Technical amendments to the
escrow rules;
-
The new E-Sign provision; and
-
The new severability clause.
Please do not hesitate to send us an e-mail (info@ruthtechnology.com) if you have questions, comments or if
you come across something that would contribute to this section. |
