New Mortgage Rules

From: HUD USER News
 
The U.S. Department of Housing and Urban Development has
issued long-anticipated mortgage reforms that will help
consumers shop for the lowest cost mortgage and avoid
costly and potentially harmful loan offers. HUD will
require that lenders and mortgage brokers provide
consumers with a standard Good Faith Estimate (GFE) that
clearly discloses key loan terms and closing costs. HUD
estimates its new regulation will save consumers nearly
$700 at the closing table.
 
The easy-to-read standard Good Faith Estimate (GFE) will
clearly answer the key questions consumers have when
applying for a mortgage, including:
 
o What's the term of the loan?
o Is the interest rate fixed or can it change?
o Is there a pre-payment penalty should the
 borrower choose to refinance at a later date?
o Is there a balloon payment?
o What are total closing costs?
 
The GFE will consolidate closing costs into major
categories to prevent junk fees, and 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, and if a fee changes, HUD will
limit the amount it can change.
 
The Department performed rigorous consumer testing and
found that the new Good Faith Estimate helped consumers
select the lowest cost loan 9 out of 10 times,
regardless of whether the loan was originated by a
lender or a broker. HUD will require the new
standardized GFE and HUD-1 beginning January 1, 2010.
 
PD&R's Office of Economic Affairs was instrumental in
the development of the RESPA rule by providing policy
guidance in developing the rule, conducting research to
define the problems in the mortgage settlement process,
overseeing the development of the new forms required by
the rule, and writing the Regulatory Impact Analysis/
Final Regulatory Flexibility Analysis.
 
For additional benefits and details about these reforms
to the regulatory requirements of the Real Estate
Settlement Procedures Act (RESPA), click on the
following links:
 
News release and fact sheet
HUD's Standard Good Faith Estimate
HUD-1 Settlement Statement
 
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