HUD (or is it DUH!) Final Changes
By David Dickinson
Unbelievable! HUD just doesn't get it. In March they announced a new RESPA proposal that would include a 4 page Good Faith Estimate and closing script with 19 pages of selected items to read depending on the situation (purchase, refinance, home equity loan, etc.). The RESPA proposal requires the lender to read the selected script to the borrowers at closing to ensure they understand the loan. The shortest script would be 5 pages. We wrote a blog on this proposal in March.
In August, 240 plus House of Representatives signed a letter calling for HUD to remove their proposal. The letter also asked HUD to work with the Federal Reserve Board to produce more simplified real estate disclosures. Well, they aren't listening.
On Wednesday HUD announced that it finalized the changes and is publishing them in Friday's Federal Register. The changes will become effective on January 1, 2010. There is a new 3 page Good Faith Estimate and a new 3 page HUD-1 Settlement Statement. The GFE crosses over into several Truth in Lending requirements (interest rates and loan terms). It also has tolerances on some closing costs. It appears the closing script has been removed.
What we don't know is the status of the Servicing Disclosure ("We plan to keep or sell your loan"). The requirement to provide this disclosure changed in 1996, but HUD has never gotten around to writing the regulation to make these changes. Amazing!
Along with the High Priced Mortgage Loan rules that go in effect in October 2009, real estate loans will be much more difficult to complete (and not near as much fun!) 