HUD: RESPA Reform Coming by Fall

Budget documents released by the Department of Housing and Urban Development reveal that HUD plans to issue a final rule to simplify the mortgage application and settlement process before the end of September.Some sources say they expect the Real Estate Settlement Procedures Act rule to be issued within the next 60 days. This rule would revamp HUD's RESPA regulations to provide consumers with "upfront disclosures of all costs associated with obtaining a federally related mortgage loan in understandable terms prior to the payment of non-refundable fees," a summary of HUD's budget says. Another budget document, issued by the Office of Management and Budget, indicates that the RESPA rule will include penalties for lenders who fail to accurately disclose mortgage broker fees, interest rates, balloon payments, and prepayment penalties. The RESPA regulations would "facilitate guaranteed-price packaging to help borrowers shop for the cheapest loan (saving, on average, as much as $700 per loan settlement) and be assured that the price will not change at the settlement table," the OMB says. HUD submitted its RESPA rule to the OMB for final clearance on Dec. 16. It normally takes the OMB three months to review a major rule before its can be published in the Federal Register.