Posted on July 18, 2008 by Daniel O'Rielly

Comment Period Closes on HUD's RESPA Reform Rule

HUD issued its proposed rule amending the Real Estate Settlement Procedures Act ("RESPA") in a March 14, 2008, press release.  The comment period for the rule expired on June 12, 2008, after HUD extended the original deadline 30 days to accommodate a high volume of public comment.

The new rule would significantly amend Regulation X provisions regarding required mortgage disclosures and related mortgage loan settlement procedures:
  • requiring a new standardized Good Faith Estimate form intended to make loan comparisons easier, to simplify the summary of loan terms and charges, and to provide more accurate estimates of costs for settlement services;
  • requiring additional detailed disclosures of yield spread premiums;
  • requiring a revised HUD-1 Settlement Statement form;
  • requiring a particular "closing script" to be read to and provided to borrowers at closing, which would vary depending on the terms of the mortgage (see, e.g., a fixed interest rate closing script).
HUD also seeks expanded statutory authority providing enforcement provisions (including civil penalties for violations of RESPA), changing the delivery deadlines for HUD-1 forms, and expanding the applicable statute of limitations for government or private actions under RESPA. 
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