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Freddie Mac issues single-family seller/servicer guide bulletin

National Mortgage Professional
Jan 24, 2006

A message from NAMB President Jim Nabors: NAMB unveils a new GFE and other initiatives at HUD roundtableJim NaborsHUD roundtables The National Association of Mortgage Brokers has attended the last of the HUD-sponsored Real Estate Settlement Procedures Act roundtables in Washington, D.C. As you know, we have been diligent in our efforts to attend and participate in all of these RESPA events around the country. They have been critically important and may very well set the course for RESPA reform in the near future. NAMB has listened carefully to 24 hours of testimony and commentary from more than 300 participants at the roundtables. The participants included industry leaders, trade group representatives, small business owners, bankers, brokers, settlement service providers and consumer advocacy groups. We have taken this process, and the suggestions made by HUD Secretary Alphonso Jackson, very seriously. The HUD secretary urged us to think constructively and to recommend real world solutions to the problems that affect our industry. We take very seriously our responsibility to consumers and to the mortgage brokers of America to be a constructive part of this process. To that end, at the last RESPA roundtable, we presented our view of RESPA Good Faith Estimate (GFE) reform. We presented a new proposed GFE to replace the existing GFE and the 2004 proposal. The highlights of our proposal are as follows: To achieve HUD's goal of simplicity Our form is one page long, rather than the 2004 proposal that is four pages long. We have deleted the "teeter-totter," as it is confusing, and suggested that the shopping chart be added to the HUD Settlement Guide Booklet. To achieve HUD's goal of clarity Our form looks like the HUD-1. This suggestion has been made at each of the five previous roundtables. Our recommendation also includes a paragraph describing the role of the originator. One of the concerns expressed at the roundtables includes the perception that a mortgage broker "works for the borrower to get them the best deal" in the marketplace. While we disagree with this perception, we think it reasonable to disclose our relationship to the borrower. Lenders would have to do the same thing. We have also recommended that the yield spread premium disclosure be dropped from the GFE form, as it adds nothing to the clarity of the transaction or the consumer's capability to shop. To achieve HUD's goal of transparency Our form contemplates that HUD will require re-disclosure before funding if the settlement costs proposed at funding are 10 percent higher than estimated. Any change of interest rate or program would also require re-disclosure. We have added certain elements that are now on the HUD-1 Settlement Statement, as well. To achieve HUD's goal of greater certainty of costs Our proposal recommends that HUD issue guidelines that allow consumers a private legal cause of action against the originator in the event that no re-disclosure is made. Our proposed GFE form is available for your review on the NAMB Web site, www.namb.org. If you have comments or concerns, please feel free to contact Legislative Chair Joe Falk at joefalk@bellsouth.net. It is our hope that this form will be the template for future discussions with HUD on GFE reform. While not a perfect document, it goes a long way toward achieving simplicity, clarity, transparency and a greater certainty of costs for the consumer. We pledge to continue strong leadership in this effort and to always represent the best interests of mortgage brokers all across America. Thank you for your support. Jim Nabors, President National Association of Mortgage Brokers
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