No More Closing Surprises
July 31, 2002
Reformed RESPA Aims To Shed Light On Mortgage Broker Fees, Educate Borrowers
Inman News Features
Consumers shopping for a home loan may soon know upfront how much money their mortgage broker will make from their deal under new guidelines for disclosure of mortgage broker compensation as outlined by the Department of Housing and Urban Development in its proposed reform plan for the Real Estate Settlement Act, which was released yesterday in the Federal Register.
Under the proposal, mortgage brokers would be required to disclose in the Good Faith Estimate and HUD-1 Settlement Statement "any payment from the lender based on the borrowers transaction," including Yield Spread Premiums. In short, the plan calls on mortgage brokers to disclose at the outset the maximum amount of compensation they could receive from a transaction, according to the Federal Register, Vol. 67, No. 145, dated July 29.
The reform measures regarding mortgage broker compensation were formed under the guidance of five principals submitted to HUD by Secretary Mel Martinez, who last year said he planned make full use of his regulatory authority to provide clear requirements and guidance regarding the disclosure of mortgage broker fees in an attempt to improve the mortgage settlement process and better serve borrowers, according to the register.
The five principals aim to provide loan shoppers with cost information early in the process, firm disclosures in an effort to avoid surprise closing costs, regulatory amendments that would remove unintended barriers to marketing new products that could lower settlement costs, an improved loan origination process through simplification of disclosures and borrower education and vigorous enforcement of RESPA, which aims to ensure that honest industry providers have a level, competitive playing field.
Copyright: Inman News Service