WASHINGTON – HUD today issued long-awaited rules for RESPA reform.
The agency estimates that the new requirements for the good faith estimates will save borrowers nearly $700 per closing.
HUD will require, for the first time ever, that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs.
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HUD's new three-page GFE includes an instructional page to help borrowers better understand their loan offer.
The form now consolidates closing costs into major categories to prevent junk fees and to display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.
To help borrowers compare their GFE with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE allowing borrowers to easily compare their estimated and actual costs.
The new form also requires that lender payments to mortgage brokers be disclosed in a more meaningful way.
HUD will require the use of the form starting Jan. 1, 2010. The document is available at HUD's Web site.
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