Here Come the Feds, Here Come the Feds

The Feds have ridden up on their white horses once again, this time to institute changes to RESPA, the Real Estate Settlement Procedure Act, a federal law designed to help borrowers shop for the best loan. RESPA is enforced by HUD, Housing and Urban Development. RESPA requires federal loan or mortgage programs backed by the Feds, like FHA for example, to provide borrowers with how much their closing costs and other fees are going to be. Many people know this document as the Good Faith Estimate. Recent changes in RESPA regulations which became effective January 1, 2010, require a standard format for the Good Faith Estimate which clearly discloses key loan terms and closing costs. The estimate must remain valid and binding for a certain number of days, allowing borrowers to shop around for better terms and lower fees. Time periods under the new RESPA rules must be honored. The good news is that borrowers should be better informed and in a better position to speak with other lenders and negotiate a better loan. The bad news is that the lender now has more hoops to jump through that will require borrowers to jump through some hoops of their own.