Revised RESPA Mortgage Disclosures Take Effect
New regulations promulgated by the U.S. Department of Housing and Urban Development in November 2008 to revise RESPA disclosures took effect on January 1, 2010. Among other things, the new RESPA final rule requires mortgage issuers to use a new HUD-1 settlement statement and a new Good Faith Estimate. To assist compliance, HUD has issued a list of answers to frequently asked questions as well as new instructions for HUD-1 and GFE forms. HUD has also issued a revised settlement booklet to educate consumers about mortgage products and the financial impact of buying a home.
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:
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).
