The Mortgage Bankers Association (MBA) has responded to the Department of Housing and Urban Development's (HUD) final rule under the Real Estate Settlement Procedures Act (RESPA), which includes new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms.Â
‘The rule's new estimate and settlement forms are an important step toward developing more consumer-friendly forms that will help borrowers better understand the loan they are getting and the fees they are paying while making it much easier for a borrower to shop and compare the different loans they are offered,’ says David Kittle, MBA chairman.
In comments submitted to HUD in response to the proposed rule in March, the MBA strongly recommended that HUD update the RESPA rule in tandem with the Federal Reserve's ongoing efforts to enhance consumer disclosures required by the Truth in Lending Act (TILA).
‘We are disappointed that HUD did not coordinate more closely with the Federal Reserve as the Fed implements its own improvements under TILA,’ says John A. Courson, the MBA's chief operating officer. ‘As we have said many times, these two efforts ought to be undertaken together to ensure that the new guidelines and disclosures actually make the loan process simpler and more transparent for borrowers.’
‘We also believe that HUD should provide greater clarity concerning the new requirements on disclosure of broker fees tied to the interest rate selected by the borrower,’ he continues.
The rule will become effective 60 days from when it is published in the Federal Register (expected to occur this week). Lenders will have until Jan. 1, 2010, to implement the new GFE and HUD-1.