Alert November 18, 2008

HUD Issues Final RESPA Rule

HUD issued a final rule amending Regulation X, the implementing regulation of the Real Estate Settlement Procedures Act. Among other things, the rule:

  • establishes new Good Faith Estimate and HUD-1/HUD-1A settlement statement forms;
  • limits the charge that may be imposed on consumers for delivery of the GFE;
  • requires yield spread premiums to be included in the “origination charge” disclosed on the GFE, and treats lender payments to mortgage brokers as a credit towards settlement charges;
  • expands the definition of “mortgage broker” to include exclusive agents of a lender who provide origination services and serve as an intermediary between the lender and the borrower;
  • amends the definition of “required use” to include incentives for using a particular service provider (e.g., builder discounts for using an affiliated lender);
  • clarifies escrow account requirements and mortgage servicing transfer provisions; and
  • provides that all RESPA disclosures may be provided to consumers in electronic form, as long as the consumer consents to receive the disclosures electronically and the other requirements of the Electronic Signatures in Global and National Commerce Act are satisfied.
Compliance with the new GFE and settlement statement is not required until January 1, 2010. However, certain provisions, including the required use provision, are in effect beginning January 16, 2009. Click here for the rule, here for the new GFE, here for the new HUD-1 and here for the new HUD-1A.