The "Stimulus Bill" is not the only Hot Topic now days. The Federal Government has recently finalized some big changes on the Settlement Rules for Residential Sales, but it will be nearly a year before you will see any big changes at the Closing Table.

One of the final Projects the Bush Administration had been working on was the revision of  the GFE (Good Faith Estimate) and HUD-1 (Closing Statement). The purpose of this is to make it easier for Consumers to compare costs between the two documents and improve the disclosure of Yield Spread Premium that are paid to Mortgage Brokers, which should eliminate the long going problem that Consumers face when going to the closing table.

There have been some minor changes in this Reform that did take effect on January 16^th, 2009. However the Date that is most important for Real Estate Practitioners to remember will be January 1^st, 2010.  That is when Lenders will be required to use a complete revamped new three page Good Faith Estimate along with a revised HUD-1 Closing Statement.

These new forms will require Lenders to calculate the yield spread premiums as part of their origination fee.  Of course the National Association of Mortgage Brokers has said it will challenge this in Court.

Home Builders are also angry that there will be a provision that will prohibit that from using an incentive to channel consumers into one of their affiliated services such as their Mortgage Lenders and Title Companies.  Many Home Builders have indicated they may challenge this provision as well.

Another significant change with the new forms will be no longer allowing Lenders to change certain costs that are stated on the Good Faith Estimate disclosure. Some costs that cannot be changed will be the Origination Fees and Transfer Taxes.  Some 3rd Party Costs such as Title Searches & Inspections can change; however this will be limited to no more than a 10% adjustment. If the difference is greater than 10% the Transaction can still close, however the cost Discrepancy will have to be worked within 30 days.

While all these changes will help many consumers, we will need to watch and see how many of these reforms translate into real-life situations. For more information, visit the National Association of Realtors Website.