HUD Promotes Study on Unfair Closing Costs

Looking to bolster its case for Real Estate Settlement Procedure Act reform, the Department of Housing and Urban Development is promoting a study done by the Urban Institute, which said many Americans overpay by thousands of dollars in closing costs when they purchase a home. Susan Woodward, author of the report, "A Study of Closing Costs for FHA Mortgages," looked at 7,500 mortgages originated in May and June 2001 and found significant disparities in closing costs even for borrowers with identical credit scores, loan terms and mortgage amounts. "This report demonstrates once and for all that the process consumers endure when they buy their homes is entirely too confusing," said HUD Deputy Secretary Roy A. Bernardi. "Clearly, we need to open the window and allow consumers to understand the fine print and shop more effectively for the largest purchase of their lives." HUD said its proposed four-page Good Faith Estimate, which is opposed by both the National Association of Mortgage Brokers and the Mortgage Bankers Association, would allow for more disclosure of the key elements of the loan and prevent what it termed "fee creep" at closing. It would also promote comparison shopping, HUD claimed.