Fact Sheet on HUD's final RESPA Rule
For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:
- What's the term of the loan?
- Is the interest rate fixed or can it change?
- Is there a pre-payment penalty should the borrower choose to refinance at a later date?
- Is there a balloon payment?
- What are total closing costs
Consumers will be able to save almost $700 in total closing costs because HUD will improve upfront disclosures on GFE and limit the amount estimated charges can change.
The GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.
HUD will allow lenders and settlement service providers to correct potential violations of RESPA's new disclosure and tolerance requirements. Lenders and settlement service providers now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.
The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.
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