New RESPA rules from HUD went into effect Jan 1, 2010 for lenders. Naturally with any change there has been some confusion, while lenders iron out the details there are some areas that will help you understand your options during the pre-approval and approval process.
One major change is with regard to disclosure. The new 3-Day Rule is where lenders must provide a GFE within 3 days of receiving a loan application. HUD does allow the lender to provide a general worksheet during the pre-approval process when the applicant has not identified a specific property address however is required to provide a GFE if the applicant specifically asks for one.
New Fee Catagories. An area on confusion is the disclosure of fee catagories. The new GFE fee disclosure is broken down into 3 catagories. 1) Fees that can not change at closing (example: origination fee), 2) a group of charges that in total can change up to 10%, 3) charges that are permitted to change if the borrower chooses to shop around for services.
The two areas above only scatch the surface of the new changes. In short the changes are all about checks and balances. The goal is to help borrowers gain a better understanding of the costs associated with the mortgage loan process. For more detail visit www.hud.gov/respa.
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