The Department of Housing and Urban Development (HUD) has released an updated version of a booklet that’s intended to help consumers comparison-shop for a mortgage.
Much of the 49-page publication, "Shopping for Your Home Loan: HUD’s Settlement Cost Booklet," is devoted to the new standardized Good Faith Estimate and HUD-1 settlement statement forms that lenders must begin using on Jan. 1.
The forms and other changes to implementation of the Real Estate Settlement Procedures Act (RESPA) are intended to help consumers comparison shop. HUD believes the new RESPA rules, which encourage lenders to package settlement services like title insurance with loans, will save consumers an average of nearly $700 in costs and fees per mortgage.
The new RESPA rules place restrictions on changes to estimated loan origination and settlement service charges as disclosed on the GFE. The RESPA rule changes also require that mortgage brokers disclose "yield spread premiums" — rebates paid by lenders when borrowers take out loans at higher interest rates than they could qualify for — and credit them against a borrower’s closing costs.
A judge dismissed a legal challenge of the rule changes by the National Association of Mortgage Brokers in July (see story). HUD says it will "exercise restraint" for the first four months of 2010 in enforcing the new regulations.
HUD has posted a RESPA "FAQ" — answers to "frequently asked questions" — and other information on a dedicated RESPA page to help lenders, settlement services providers and consumers understand the new rules.
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