I had an interesting conversation with with a residential mortgage lender yesterday regarding the new changes that went into effect on January 1, 2010. For regular readers of our real estate blog, I covered these changes a few months ago in an article about RESPA reform.
His point is that while the changes appear to be based on good intentions, they might also be throwing mortgage underwriting and mortgage origination into chaos for the next few months. New methodologies are having to be created to process the new federal requirements.
With this in mind, I felt a review of these regulatory changes regarding the Real Estate Settlement Procedures Act (RESPA), Final Rule, which went into effect on January 1, 2010, was something that would assist our readers.
Changes In RESPA
As of this past Friday, HUD requires that lenders and mortgage brokers provide consumers with a new, standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Closing agents are also required to provide borrowers with a new HUD-1 Settlement Statement that clearly compares consumers’ final and estimated costs.The new RESPA rule became effective in January 2009, but HUD had provided a one-year transition period for the mortgage industry to incorporate these changes. That time is now up and we are going to see these changes begin to affect the flow of our real estate settlement operations. While the responsibility for the implementation of new GFE and HUD-1 documents primarily impacts the mortgage lenders and law firms who must provide these documents to consumers, RESPA applies to everyone in the real estate profession.
Your Tallahassee real estate professional should be well aware of these changes to the documentation that you will receive from your lenders and at the closing table. Proper preparation will allow for a much smoother real estate transaction as well as insuring that an actual settlement takes place. Nobody buying or selling real estate in Tallahassee wants to see their contract fall through due to the ignorance of the real estate agent.
No Relief From RESPA For Tallahassee Mortgage Originators
Although HUD recently announced a 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate good faith in implementing RESPA’s new rules, the department still expects all loan originators to begin using the new GFE and revised HUD-1 beginning January 1, 2010.
Mortgage Origination Tip: The new RESPA rules might create a burden on your mortgage originator, so be proactive! Before you meet with the originator, ask him or her what documents could you bring to make the process go smoother and faster!
Bring all of them (not most of them!). Additionally, you could fill out the Fannie Mae Form 1003, which is the Uniform Residential Loan Application that the mortgage originator will be required to complete before discussing with you your full qualifications.
Again, the intent of the new RESPA rule is to clarify disclosures to and reduce closing costs for consumers. Unfortunately, history teaches us that the more cumbersome the administrative process, ultimately the higher the cost to the consumer. It is our intent at Joe Manausa Real Estate to make sure that does not happen to our customers!
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.