Mortgage lenders will get a break during the first few months after a new Real Estate Settlement Procedures Act rule takes effect.
The RESPA rule, which is effective as on Jan. 1, 2010, requires a new Good Faith Estimate that reflects fully disclosed yield spread premiums. A new HUD-1 settlement statement that clearly compares estimated and final costs is also being implemented.
The rule is intended to ensure borrowers receive clearly disclosed key loan terms and closing costs.
In a statement today, the U.S. Department of Housing and Urban Development.said its Mortgagee Review Board would “exercise restraint in enforcing” the new regulatory requirements for the first four months of next year if the FHA-approved lender has demonstrated a good faith effort in complying with the new RESPA requirements.
The board will determine if a good faith effort has been made based on “whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training and quality control designed to comply with the new rule.”
Other state and federal agencies are being asked to exercise the same 120-day restraint in enforcement for non-FHA originators who demonstrate a good faith effort.
HUD Secretary Shaun Donovan noted in the announcement that the agency is sensitive to the industry’s concerns.
