HUD Looks To Redefine ‘Required Use’

ousing and Urban Development Secretary Shaun Donovan has announced his intention to implement the mortgage reforms under the Real Estate Settlement Procedures Act (RESPA) that are scheduled to take full effect on Jan. 1, 2010. Meanwhile, HUD is withdrawing current language – and announcing its intent to propose revised language – for a narrow provision of the final RESPA rule that redefines a prohibited practice called ‘required use,’ where consumers are steered toward higher cost mortgage services provided by affiliated businesses. ‘[A]fter further consultation with the public, stakeholders and Congress, we will propose a clearer and more effective "required use' definition that truly protects borrowers from those who force them to use affiliated businesses," Donovan says. "Needed consumer protections are too important to allow confusion over one specific provision to hold up needed RESPA reforms.’ On Jan. 1, HUD will require that lenders and mortgage brokers provide consumers with a standard good faith estimate that clearly discloses key loan terms and closing costs. Closing agents will also be required to provide borrowers a new HUD-1 settlement statement that clearly compares consumers' final and estimated costs. SOUR

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