HUD Extends RESPA Comment Period

MBA (5/8/2008 ) Sorohan, Mike
HUD, responding to requests by the Mortgage Bankers Association and other industry trade groups, announced yesterday that it would extend the comment period for its proposed changes to the Real Estate Settlement Procedures Act, known as RESPA, until June 12.
The 30-day extension came in part as a result of concerns by MBA and other trade groups that the original 60-day comment period, set to expire on May 13, provided them with insufficient time to respond to the proposed rules, which runs more than 300 pages. MBA and the trade groups had asked for a 60-day extension.

The proposed new rules, issued March 15, would:

• Establish a four-page standard Good Faith Estimate (GFE) form;
• Impose tolerances to limit increases in GFE estimates at closing:
• Revise requirements for disclosure of mortgage broker fees as "the charge or credit for the interest rate chosen;”
• Make changes to the HUD-1 to facilitate comparison between GFE and HUD-1 charges;
• Establish a new script to be read to borrowers at settlement concerning final loan terms and settlement costs;
• Revise regulations to permit certain average-cost pricing and volume discounts;
• Clarify “required use” requirements to restrict disincentives to use of non-affiliates; and
• Make technical amendments to the RESPA rules.

The proposal also said HUD would seek legislative proposals to increase enforcement authority, including injunctive authority, under RESPA concerning the GFE and HUD-1, servicing, Section 8, title insurance and escrow accounts.

MBA and the trade groups had also noted that the Federal Reserve Board had requested comments on a far-reaching proposal to amend Regulation Z, its Truth in Lending Act regulations, which they said would have "important implications for HUD’s proposal.”