HUD Secretary Donovan announces intent to move forward with RESPA reformMortgagePress.comU.S. Housing and Urban Development, Shaun Donovan, RESPA reform, HUD-1 settlement statement, required use
U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan
has announced his intention to implement the mortgage reforms under
the Real Estate Settlement Procedures Act (RESPA) that are
scheduled to take full effect on Jan. 1, 2010. For the first time
in more than 30 years, HUD is updating mortgage rules to help
consumers shop for the lowest cost mortgage, avoid costly and
potentially harmful loan offers, and save an average of $700.
Meanwhile, HUD is withdrawing, and announcing its intent to
propose revised language relating to, a narrow provision of the
final RESPA rule that redefines a prohibited practice called
'required use' where consumers are steered toward higher cost
mortgage services provided by affiliated businesses.
"This administration is committed to providing consumers with
clear and transparent information when they make the biggest
purchase of their lives," said Donovan. "We will implement the new
RESPA rules as part broader reforms to the mortgage process. And
after further consultation with the public, stakeholders and
Congress we will propose a clearer and more effective "required
use" definition that truly protects borrowers from those who force
them to use affiliated businesses. Needed consumer protections are
too important to allow confusion over one specific provision to
hold up needed RESPA reforms."
On January 1, 2010, 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. Closing agents will also be required to provide
borrowers a new HUD-1 settlement statement that clearly compares
consumers' final and estimated costs. By promoting comparison
shopping, HUD's final RESPA regulation is estimated to save
consumers an average of nearly $700.
Donovan indicated after a thorough review of more than 1,200
public comments, HUD will propose a new 'required use' definition
to help consumers shop effectively and safely for homes and
mortgages, free from the influence of disingenuous discounts and
incentives that steer consumers to the use of affiliated
businesses. In the interim, HUD's existing 'required use'
definition will remain in effect.
To read the full text of HUD's notice to withdraw the 'required
use' definition, click here.
For more information, visit www.hud.gov.