New RESPA rules – in effect January 1, 2010 – are instituting major changes in the Good Faith Estimate and HUD-1 settlement statement. For the real estate industry, this means major changes in the way lenders and title companies conduct business. For consumers, particularly buyers, this means more transparency in lender fees and closing costs.
For buyers, Regulation X should help prevent surprises in fees during escrow. With some exceptions, lenders will be bound to the fees disclosed in their initial GFE’s. In theory, buyers can better shop around for lenders and compare financing terms. And if lenders really do their jobs, then the changes should lead to a more informed borrower. (Click here to download HUD’s new booklet detailing the revised GFE and HUD-1.)
On the other hand, the new guidelines’ rigidity will create escrow headaches as well. Our current market is a world of distressed sales and tough loan underwriting. Escrow delays and lost rate locks are common, increasing the likelihood of amending the terms of GFE’s…and thus violating Regulation X.
