Alert November 17, 2009

HUD to “Restrain” Enforcement of New RESPA Rule for Four Months

HUD announced that it will exercise "restraint" in enforcing provisions in its new Real Estate Settlement Procedures Act rule set to become effective on January 1, 2010 during the first four months of 2010. According to HUD, it will exercise such restraint for FHA-approved lenders having demonstrated that they are making a "good faith effort" to comply with the rule. In determining whether a lender has made a good faith effort, HUD will consider (1) whether the lender has relied on the rule and other written guidance issued by HUD (e.g., the FAQs), and (2) the extent to which the lender has made sufficient investment and commitment in technology, training, and quality control designed to comply with the rule. HUD is asking other federal and state enforcement agencies to exercise the same enforcement restraint for non-FHA lenders and other settlement service providers who demonstrate a good faith effort to implement the rule. Click here for HUD’s related press release.