What becomes effective January 1, 2010 on the closing statements?
In order to make HUD-1 closing statements more transparant for the parties involved, the Department of Housing and Urban Development (HUD) has made various changes. HUD has tried to protect consumers, particularly buyers, during the course of dealing with their lenders and at the closing table.
Here are a few of those changes:
1. Mortgage brokers will need to calculate their commissions from their lenders (known as yield-spread premiums) as part of the loan origination fee, brokers will be less likely to place their customers into loans at the high end of the interest rate spread.
2. Lenders will have to complete a new good faith estimate form, which will be three pages rather than the current two-page form.
3. Origination fees and transfer taxes on the HUD-1 must be exactly as stated on the lender's good faith estimate.
4. Some costs from entities unaffiliated with the lender (i.e., certain title company and inspection fees) can change between the good faith estimate and the HUD-1, but the change cannot be greater than 10%. Note transactions may still close if the discrepancy is greater than 10% but all discrepencies will need to be reconciled and corrected within 30 days.
Hope you all have been attending classes as we are in for a "new look" on the closing statements! There will be lots of questions and you need to be ready with the answers.
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