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Mortgage Could Cost $400 more….Call HUD. See if they’ll pay

<span class=”Apple-style-span” style=”color: rgb(152, 2, 1); font-family: Arial; font-size: 13px; -webkit-border-horizontal-spacing: 1px; -webkit-border-vertical-spacing: 1px; “><span class=”option” style=”background-image: none; background-repeat: initial; background-attachment: initial; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; color: rgb(235, 60, 29); font-size: 15px; font-weight: bold; font-family: Arial; text-decoration: none; background-position: initial initial; color:#363636;”><b>NAR: Changes to RESPA Could Mean Extra $413 For Loan</b></span> <a href=”http://www.mortgageledger.com/modules.php?name=News&new_topic=4″ style=”background-image: none; background-repeat: initial; background-attachment: initial; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; color: rgb(156, 4, 3); font: normal normal normal 13px/normal Arial; text-decoration: underline; background-position: initial initial; “><img src=”http://www.mortgageledger.com/images/topics/MortgageNews.gif” border=”0″ alt=”Mortgage News” title=”Mortgage News” align=”right” hspace=”10″ vspace=”10″ /></a><span class=”content” style=”background-image: none; background-repeat: initial; background-attachment: initial; -webkit-background-clip: initial; -webkit-background-origin: initial; background-color: initial; color: rgb(152, 2, 1); font-size: 13px; font-family: Arial; background-position: initial initial; “><br /><br />The National Association of Realtors (NAR) has released a report suggesting that loan disclosure changes proposed by the Department of Housing and Urban Development (HUD) would add more than $400 to the average cost of obtaining a loan, more than double the estimate made by the housing agency.<br /><br /><br />In March, HUD unveiled a proposal to overhaul disclosure forms to simplify and clarify the mortgage process for borrowers with measures such as a standardized Good Faith Estimate (GFE) for all loan originators.<br /><br />The proposed reforms to the Real Estate Settlement Procedures Act (RESPA) would include standardizing the 30-year-old disclosure rules to create a single GFE disclosure for mortgage brokers, bankers and lenders.<br /><br />HUD estimates that consumers will save an average of $668 at the closing table from the simplification changes, resulting in a total savings of $8.35 billion a year.<br /><br />The proposals have met with mixed-reviews from the industry, prompting the agency to extend the public comment period by 30 days.<br /><br />The comment period ends Thursday, and a final rule is expected to be issued by HUD later this year for adoption in 2009.<br /><br />A new study funded by the NAR suggests that the changes may not be favorable as HUD claims.<br /><br />While the housing agency estimates the cost of preparing the revised GFE will add an average of $181 to the cost of obtaining a loan, economist Ann Schnare suggests it could reach as much as $413.<br /><br />“HUD is ignoring several key factors in its analysis that…could likely add an average of more than $400 to a borrower’s closing costs if implemented,” said Schnare.<br /><br />According to the report, HUD underestimated the number of GFEs that will have to be prepared – a difference that will come out of consumer’s pocketbooks.<br /><br />HUD estimates lenders will need to prepare an average of 1.7 GFEs for every loan funded, but Schnare suggests that it will likely range between 2.7 and 3.4 GFEs per loan.<br /><br />Furthermore, Schnare believes that the changes are anti-competitive, giving an advantage to larger lenders and brokers “”in a better position to negotiate rates and to extract pricing concessions from third-party settlement service providers.” <br /><br />Although consumers would be better served in the short term, the report suggests, the exodus of smaller lenders would actually decrease consumer choices and ultimately drive up prices.<br /><br />Despite the achievable benefits of simplifying and standardizing the GFE, Schnare says HUD “should seriously question whether its desire to provide greater certainty in closing costs is worth these additional costs.”<br /><br />Under the proposed changes, the GFE would include the disclosure of a number of loan details, including the 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.<br /><br />According to HUD, eliminating the differences in the GFE would allow home buyers to shop around more easily by comparing the fees charged by originators, whether they come in the form of fees charged by banks or yield spread premiums (YSPs) paid out to brokers.<br /><br />HUD’s analysis found that loan originators “have been overcharging uninformed consumers, through the combination of high origination fees and yield spread premiums.”<br /><br />According to the agency’s analysis, loan originators may lose up to $5.88 billion in revenue a year following the changes. </span></span>

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