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The following is the first in a series taken from the Federal Register about
changes to the HUD-1

Federal Register / Vol. 73, No. 222 / Monday, November 17, 2008 / Rules and
Regulations 68205

2008 Proposed Rule

RESPA is a consumer protection statute, and, as further described in this
preamble, consumer groups were, in general, very supportive of the basic
goals and key components of the March 2008 proposed rule. For example, the
National Consumer Law Center, in a joint comment with Consumer Action, the
Consumer Federation of America, and the National Association of Consumer
Advocates, stated, ”HUD has done an excellent job in moving the ball toward
greater protection for consumers in the settlement process.” In addition,
the Center for Responsible Lending, in its comment concluded: ”[W]e applaud
HUD for addressing the challenge of reforming RESPA. We believe HUD’s
proposed GFE provides important improvements over existing requirements.”

HUD received adverse comments about many aspects of the proposed rule,
primarily from mortgage industry representatives, including requests that
HUD withdraw its proposal entirely or that HUD postpone its current efforts
in order to work with the Federal Reserve Board to arrive at a joint
regulatory approach. HUD takes these comments very seriously and appreciates
the concerns raised by these commenters. HUD’s view continues to be,
however, that improvements in disclosures to consumers about critical
information relating to the costs of obtaining a home mortgage, often the
most significant financial transaction a consumer will enter into, are
needed, and that such disclosures are a central purpose of RESPA.(emphasis
added) Most commenters-including consumers, industry representatives, and
federal and state regulatory agencies-supported the concept of better
disclosures in general, and commended both HUD’s efforts and particular
provisions in the proposed rule.

Moreover, given the current mortgage crisis, the foreclosure situation many
homeowners are now facing because they entered into mortgage transactions
that they did not fully understand, and the prospect that future homeowners
may find themselves in this same situation, HUD believes that it is very
important that the improvements in mortgage disclosures made by this final
rule move forward immediately. Nevertheless, as noted in the preamble to the
March 2008 proposed rule, HUD will continue to work with the Federal Reserve
Board to achieve coordination and consistency between the Board’s current
regulatory efforts and HUD’s requirements.

HUD has made many changes to the March 2008 proposed rule in response to
public comment and further consideration of certain issues by HUD. Some of
the provisions in the March 2008 proposed rule have been revised in this
final rule and others have been withdrawn for further consideration. HUD
believes that the result is a final rule that will give borrowers additional
and more reliable information about their mortgage loans earlier in the
application process, and will better assure that the mortgage loans to which
they commit at settlement will be the loans of their choice. At the same
time, in recognition of the concerns raised by industry commenters about the
need for sufficient time for the industry to make systems and operational
changes necessary to meet the requirements of the new rule, the final rule
provides that the new GFE and HUD-1 will not be required until January 1,
2010. However, certain other provisions of the rule will take effect 60 days
from the publication date of the final rule. The following are some of the
most significant changes made at this final rule stage, and are discussed in
more detail in the discussion of public comment.

. A GFE form that is shorter than had been proposed.

. Allowing originators the option not to fill out the tradeoff table on the
GFE form.

. A revised definition of ”application” to eliminate the separate GFE
application process.

. Adoption of requirements for the GFE that are similar to recently revised
Federal Reserve Board Truth-in-Lending regulations which limit fees charged
in connection with early disclosures and defining timely provision of the
disclosures.

. Clarification of terminology that describes the process applicable to, and
the terms of, an applicant’s particular loan.

. Inclusion of a provision to allow lenders a short period of time in which
to correct certain violations of the new disclosure requirements.

. A revised HUD-1/1A settlement statement form that includes a summary page
of information that provides a comparison of the GFE and HUD-1/1A list of
charges and a listing of final loan terms as a substitute for the proposed
closing script addition.

. Elimination of the requirement for a closing script to be completed and
read by the closing agent.

. A simplified process for utilizing an average charge mechanism.

. No regulatory change in this rulemaking regarding negotiated discounts,
including volume based discounts.

Continuing Education for Title Agents

Free classifieds for the
Title Industry

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