MBA issues formal comments on HUD's RESPA proposalMortgagePress.comMBA, RESPA, comment lettters, RESPA proposal, TILA,
The Mortgage Bankers Association has released its formal
comments in response to the Department of Housing and Urban
Development's (HUD's) proposed rule to amend Regulation X, its Real
Estate Settlement Procedures Act (RESPA) regulations. In the
letter, MBA's President and CEO Jonathan L. Kempner urged HUD to
coordinate its RESPA reform efforts with the Federal Reserve's work
to improve clarity about the terms and cost of credit under the
Truth in Lending Act (TILA).
"MBA applauds HUD's RESPA reform efforts and believes RESPA
reform has the potential to greatly improve disclosures to
consumers concerning their closing costs," said Kempner. "Recent
events demonstrate that borrowers also need additional clarity
about the terms and cost of credit,which falls under the Fed's
responsibility under TILA. For that reason, we strongly believe
that HUD should link its efforts with the Board of Governors of the
Federal Reserve so that both agencies work together in a careful,
coordinated and comprehensive manner to truly simplify and improve
the mortgage process for consumers."
Specifically, MBA's comments call on HUD and the Fed to work
together to produce a combined TILA and Good Faith Estimate (GFE)
form and implement it at the same time to replace the current RESPA
and TILA disclosures that are provided to borrowers at the time of
application. MBA and its members have developed a proposed combined
form, as well as a comparable revised HUD-1, which MBA included
with its comment letter.
In the event that HUD decides to move forward to finalize the
rule without the Fed, MBA proposes HUD do the following:
• Pare back its proposal and forms to address only closing
cost issues (consistent with its statutory authority);
• Make the form given at the time of loan application and
the HUD-1 more consistent so borrowers can easily compare their
costs;
• More clearly disclose both lender fees and mortgage
broker fees on the GFE and HUD-1;
• Revise the tolerances contained in the proposal with
bright line safe harbors to reduce surprise charges at
settlement;
• Eliminate the "closing script" which HUD says would add
45 minutes to each closing;
• Allow lenders and brokers to use "average cost
pricing";
• Also allow "volume discounts" without the restrictions
proposed so borrowers can realize the maximum benefit of such
arrangements;
• In its letter, MBA also states that it would support
complementary statutory changes that would truly simplify and
improve the mortgage process.
A copy of MBA's comment letter, including its proposed revised
GFE and HUD-1 forms, can be found by clicking
here.
