ABA Letter to HUD
By David Dickinson
On October 13, the ABA and five other organizations wrote a letter to HUD asking them to suspend the Good Faith Estimate and Settlement Statement requirements set to go into effect in January. Its 49 pages long (can't anyone write a short letter anymore?), but is well supported. You can skim the letter by scrolling through it and reading the information in the boxes. These are their requests summarized into a sentence or two.
My favorite part of the letter is found on page 2:
In light of the issues we describe in this letter, the undersigned organizations respectfully request that you postpone the implementation date of the rule and take the following steps to achieve effective implementation of the rule:
- Finish resolving all of the issues we describe in this letter. (We believe many of the issues we discuss require revised FAQs to ensure consumers can receive clear disclosures and other important benefits.)
- Then provide the industry with a reasonable implementation period before compliance becomes mandatory.
- Notify the public, pursuant to §19 of RESPA, that beginning on January 1, 2010, and through the implementation period, use of the new or old forms will not constitute a violation of RESPA in transactions subject to the rule.
Without taking the steps recommended above, widespread consumer confusion, crippling market dysfunction, and a strong possibility of an imminent litigation morass are on the horizon.
I also wonder how loan software vendors are going to be able to prepare forms by January 1st. In our conversations with a HUD attorney, we learned that the new Good Faith Estimate, HUD-1 and HUD-1A have not received approval from the Office of Management and Budget (OMB). This attorney also stated he knew of a few changes that needed to occur. So how can software vendors create a program to produce these disclosures if they aren't "official" yet?
I'm looking into my crystal ball and it tells me the RESPA rules will be delayed, but they are inevitable. If only we could have had this information 6 months ago!
So what do you do? I don't believe you can wait and see. You need to continue to train loan officers and personnel on the new changes and continue to plan on a January implementation. IF they delay the effective date, the rules will likely be similar and the same "spirit", but hopefully we'll see many questions answered.
Also, be sure to continue to check HUD's website for updated FAQs. The latest update was 10/7/09. The FAQs now have an index that contains a hyperlink to the applicable page. Changes are also in bold so you'll know what changed since the last update.
Stay tuned!