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RESPA Reform. Does it really help?

By
Services for Real Estate Pros with Business Attorney and Success Advisor

The blog below was posted today (but seems a few days outdated and also has its comments disabled).  I wanted to comment, but can't...so I'm creating my own and if you want to add your thoughts, feel free to do so. 

Having dealt with RESPA for many years (as an attorney, not a lender), I have come to realize that the protections offered to consumers are great concepts, but the reality is most consumers don't know or understand RESPA, and we complicate things exponentially by having so many required disclosures and forms that the consumer often ends up confused and dazed (or often just signs the docs without even considering reading and understanding things).  In my opinion, real mortgage reform would simplify and clarify the process, not add more confusion, more rules and more disclosures.  Do you think RESPA helps buyers make better-informed decisions?  Do you think unscrupulous lenders and other service providers still find creative ways to market and "pay" for referrals dispite RESPA's kickback rules?

Here's the blog post I referred to earlier (comes from http://activerain.com/totalmortgage)

RESPA Regulations to Take Effect January 1

Happy New Year! Originally enacted by Congress in 1974 to offer mortgage borrowers with enhanced disclosure of closing costs, RESPA (Real Estate Settlement Procedures Act) essentially eliminates any kickbacks and referral fees associated with a mortgage loan. Published on November 17, 2008, the U.S. Department of Housing and Urban Development (HUD) has scheduled the new RESPA regulations to take effect on January 1, 2010, just three days from now.

The new RESPA guidelines will require mortgage originators to provide a standard Good Faith Estimate (GFE) to their borrowers that clearly discloses the terms of the mortgage loan, as well as all closing costs involved. In addition, the new RESPA guidelines will require all closing agents to provide a new HUD-1 settlement statement to the borrowers.

For borrowers, RESPA will help them make better-informed decisions, whether they are purchasing a new home or refinancing their existing home. Enforced by HUD, RESPA will require that mortgage loan borrowers receive important disclosures at various stages of their transaction, from the beginning of the loan process to the end. As a consumer protection statute, RESPA outlaws any kickbacks that can increase closing costs.

-Robert Hyder

Comments (2)

Ron Brown NMLS #270845
NMLS ID: 40831 - Federal Way, WA

I don't see how the new forms, and disclosures will do anything positive for the consumer.  You're right that the client just ends up with their eyes glazed over by the amount of docs needing to be signed.

Jan 06, 2010 02:49 AM
John Occhi
AZ Veteran Notary Services - Marana, AZ
Mobile Notary Public/Certified Loan Signing Agent

Great Article on this important topic - Changes with RESPA.

I recently wrote my own article on the topic and could not find a group to post it to - so I created the RESPA Group, here in ActiveRain.  In just 4 days we are up to 39 members and 23 valuable blog posts.

I would like to invite you to join the group and repost this important resource to the group so many will be able to easily find it, when researching and following the topic.

Thanks for your consideration,

John

Jan 06, 2010 12:11 PM