New RESPA Rule Standardizes Good Faith Estimate

The Department of Housing and Urban Development has unveiled a new, streamlined Real Estate Settlement Procedures Act rule that revamps the good faith estimate and HUD-1 settlement forms. Based on consumer testing, HUD officials said in a news conference that they believe consumers will save $700 per loan on average because the new disclosures make it easier to choose the lowest cost loan product. Federal Housing Commissioner Brian Montgomery said testing showed that consumers choose the loan with the most favorable terms 92% of the time using the new, standardized GFE. The new rule also requires that costs on the HUD-1 form, which discloses fees at closing, cannot exceed the GFE numbers by more than 10%. In a nod to industry protests, the final rule eliminates a proposed script that closing agents would have been required to read aloud to consumers at closing.