|Title: ||MBA Applauds HUD for Proposed RESPA Rule, Cautions About Potential for Consumer Confusion |
WASHINGTON, D.C. (March 14, 2008) – Kieran P. Quinn, CMB, Chairman of the Mortgage Bankers today praised the U.S. Department of Housing and Urban Development
(HUD) for releasing a new proposed rule to simply and improve the process of obtaining a mortgage under the Real Estate Settlement
Procedures Act (RESPA).
“I want to applaud Secretary Jackson and the staff at HUD for the time and thoughtfulness they put into what is a very comprehensive
and well intentioned proposed rule,” said Quinn. “MBA has been saying for a long time that the loan origination and closing
processes can be daunting and confusing for many consumers and that providing more clarity and transparency would serve consumers
According to MBA’s analysis the proposed rule would:
• Require a new, standard good faith estimate (GFE) that would disclose loan details (loan amount, term, interest rate, initial
payment, rate lock period, whether payments can increase, prepayment penalty and whether or not there is an escrow for taxes
and insurance). The GFE would also contain costs in ten categories and advise the borrower of the relationship between interest
rate and settlement costs;
• Provide tolerances outside which the charges contained in the GFE could not increase;
• Provide a disclosure of mortgage broker fees;
• Modify the HUD-1 form to better correspond to the GFE;
• Provide a new script to be read and provided to the borrower at settlement;
• Permit disclosure of average cost pricing and negotiated discounts;
• Strengthen the prohibition against requiring the use of affiliates;
• Provide HUD with new enforcement authority.
“We would caution that this proposed rule, in combination with Federal Reserve’s ongoing efforts to revise disclosures under
the Truth in Lending Act, has the potential to add significant paperwork to the loan origination process,” continued Quinn.
“We encourage officials at HUD to coordinate with the Federal Reserve to ensure that any new mortgage disclosures actually
simplify the process for consumers.”
MBA will do a comprehensive analysis of the proposed rule and will provide substantive comments to HUD by its deadline of
May 13, 2008.
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mba.org.