In a letter to U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and Federal Housing Administration Commissioner David Stevens, a collective of bank trade groups warns that a lack of clear guidance relating to new Real Estate Settlement Procedures Act (RESPA) regulations will make industry-wide compliance difficult to achieve.
The groups, which include the American Bankers Association (ABA), the Mortgage Bankers Association (MBA) and the American Financial Services Association, wrote, ‘Despite the best motivations of HUD…we are headed for a mortgage market train wreck on the tracks of RESPA compliance.’
Changes to RESPA center on new disclosure requirements for lenders' good-faith estimates and settlement statements (i.e., HUD-1/HUD-1-A), which go into effect Jan. 1, 2010.
In August, HUD began publishing answers to frequently asked RESPA questions, but the trade groups say the ‘gap between the [new RESPA] rule, which was unclear, and practical implementation is not being successfully bridged by the FAQs.’
The groups say HUD should revise its FAQs to address a bevy of issues they deem unresolved and should subsequently provide a ‘reasonable implementation period before compliance becomes mandatory.’
SOURCE: Mortgage Bankers Association