Gear up for new HUD-1 Settlement Statements and GFEs. The Department of Housing and Urban Development (HUD) finalized its new rulings on the Real Estate Settlement Procedures Acts (RESPA).
What does RESPA reform mean to you?
Whether you help consumers find, purchase, finance or close the sale on a home, you can expect some significant changes in process and paperwork. The reforms include two new forms: a firmer Good Faith Estimate (GFE) and a new HUD-1 Settlement Statement. New rulings go into effect January 1, 2010.
New forms, more disclosure-HUD’s goal was to make it easier for borrowers to shop and compare prices among loan originators. Today, many borrowers must first pay a fee to the loan originator before they are allowed to see estimated settlement costs on the GFE – and actual settlement costs often include added fees that take borrowers by surprise, we've all seen it.
The new ruling will improve upfront disclosure to borrowers. It also includes a 10% tolerance rule that will limit acceptable increases for specific, lender-required fees and third-party services.
Consumers using the new HUD-1 Settlement Statement will find it much easier to compare their final closing costs and loan terms with those listed on the new, shorter GFE. There are many important provisions associated with the new GFE, including:
• The GFE must be delivered 3 days after borrowers apply
• Loan originators may only collect application-related fees for the GFE
• If actual settlement costs exceed amounts reported, borrowers may withdraw their loan application for a full refund of loan-related fees!
To ensure HUD compliance, smooth settlements – and happier homeowners – it’s important to know how to implement this new process in your practice. read the links below:
RESPA Final Rule Posted-http://www.hud.gov/offices/hsg/sfh/res/finalrule.pdf
HUD's Standard Good faith Estimate form- http://www.hud.gov/content/releases/goodfaithestimate.pdf
Settlement Statement ( HUD- 1) Form- http://www.hud.gov/offices/hsg/sfh/res/hud1.pdf
HUD 1 Instructions- http://www.alta.org/respa/08-11-13_HUD1_instructions.pdf
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