Today our office had an attorney come and speak to us highlighting some of the changes in new RESPA regulations which apply to contract written on or after January 1, 2010. The purpose of these new policies is to amend "HUD's regulations to further RESPA's purposes by requiring more timely and effective disclosures related to mortgage settlement costs for federally related mortgage loans to consumers." This will hopefully educate the public better so people know what they are signing up for at closing.
In short, the Good Faith Estimate (GFE) will be compared to the HUD at closing. Certain cost estimates the Buyer received when presented the GFE cannot change at all between the time the GFE was presented and closing or the attorney will not allow closing to take place, other costs cannot fluctuate more than 10%, and some (such as homeowners insurance) are allowed to remain variable.
One closing cost that will not appear on the GFE which a Buyer should always ask their agent about are HOA dues. Other than that, there should be few surprises for Buyers at closing today.
Two items on the GFE are lumped together are Item 1, the "Origination Charge" and Item 4 "Title Services and lender's title insurance." A Buyer should ask their Lender for a breakdown of the costs associated with Item 1 and should ask their attorney for a breakdown of the costs associated with Item 4.
These new regulations are designed to better protect consumers through more disclosures. In my opinion is it clearly a positive reform that will help Buyers shop loans better and make more informed decisions. For more information, please visit:
www.hud.gov/repsa
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Great post Stacy. These new changes are requiring everyone in the chain to plan and communicate much better at the onset of a transaction. I agree that once the dust settles, and people get used to these new forms, it should help clients compare terms more easily. The reconcilliation at the end of the HUD is great, but there is little room for error by anyone. In the meantime, try to remind your borrowers as they shop for rates, to not just compare fees - but also a lender or brokers experience, reputation, credentials, and level of service to their clients. These are also integral components that should be considerred during the shopping phase for a buyer. Again, great informative post.
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