Some Lenders Concerned about Short Notice on HUD Booklet

The Department of Housing and Urban Development expects lenders to provide consumers with a just-updated consumer booklet when they start using the new good faith estimate disclosure and the newly designed HUD-1 Settlement sheet on Jan. 1. But some lenders are ticked that HUD did not give them more notice about the newly revised "Settlement Closing Booklet" that was released on Dec. 18. "We were startled to learn that HUD expects us to begin using the new Booklet on Jan. 1, 2010 - 10 business days from its publication," the Consumer Mortgage Coalition said in a letter to HUD. The mortgage industry group is asking HUD to go easy on lenders that don't have the new booklet until May 1. "This would allow an orderly transition, and would help reduce unnecessary expenses," CMC executive director Anne Canfield says in the letter. Mortgage banking attorney Robert Lotstein said the new settlement cost booklet will be "really helpful" to consumers. It goes over the various sections of the four-page GFE and explains how mortgage brokers' fees (yield spread premium) works and what the tolerances are for certain settlement services. It also tells the consumer in plain English that origination fees charged by the lenders cannot change, unless certain circumstances arise, he said. Mr. Lotstein is the managing attorney at Mortgage Banking Advisors in Washington.