I wrote a blog entry last week concerning borrowers receiving revised Good Faith Estimates prior to a closing. Another mortgage blogger commented that I was wrong in my information and the dates required for review. I thought I was wrong and checked the information again (still seems right). Further, I am including a quote from a national lender explaining the idea behind the change.  The thought is that they should have a GFE that shows a more accurate outline of closing costs. These numbers should match the fees on the closing statement (HUD-1) at the time of closing. Both the Good Faith Estimate and the HUD-1 forms have been revised (longer) to explain the fees better (to the client) and allow for an easier comparison (of fees) before and during the closing. Further, it is now mandatory for the buyer and seller and closing agent to all sign the HUD-1 at the closing. Maybe we should have the attorneys and loan officer also sign it? The Real Estate Settlement Procedures Act (RESPA) Reform rules were originally announced by the U.S. Department of Housing and Urban Development (HUD) in July of last year. The RESPA Reform rules are designed to improve the disclosure (explanation) of key loan terms and closing costs to the borrower when they purchase or refinance a home, and to provide borrowers with the information and knowledge they need to comparison-shop among lenders. Lenders and mortgage brokers will be responsible for, but not limited to: Providing a revised three page standardized Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Providing a revised three page Settlement Statement (HUD- 1) that allows borrowers to easily compare their final closing costs and loan terms with those listed on the GFE. Complying with tolerance limitations on settlement charges (fees). Disclosing lender-paid compensation to mortgage brokers (often called Yield Spread Premiums (YSP)) as a “credit” to the lender’s and mortgage broker’s origination charge. Again, more information, disclosures and forms to sign. Again, the problem with this? They have to read the forms, not just sign them.

Dale Robyn Siegel