The New Good Faith Estimate & HUD Guidelines Effective 1/01/10
The U.S. Department of Housing and Urban Development (HUD) has updated and re-released “Shopping for Your FHA Home Loan: HUD’s Settlement Cost Booklet.”
A large share of content in the 49-page publication, which helps consumers comparison-shop mortgages,
addresses the standardized Good Faith Estimate(GFE) and HUD-1 settlement statement forms that lenders must
start using on Jan. 1, 2010.
HUD estimates that consumers could save almost $700 in costs and fees per loan on average as a result
of the new requirement, which is one of several changes to the Real Estate Settlement Procedures Act (RESPA).
In addition to the updated literature, the agency has set up a RESPA “FAQ” section and other information
on a dedicated RESPA page so that consumers, settlement service providers and lenders can gain a better
understanding of the new rules.
Here is the location of the .pdf of the booklet that you can save or print out for your reference.
http://portal.hud.gov/portal/page/portal/HUD/documents/Settlement Booklet December 15 REVISED.pdf
Lenders are now required to provide loan applicants with the following:
?Good Faith Estimate—provided at the time of application to borrowers to outline the loan terms and
total settlement costs.
?HUD-1/HUD-1A Settlement Statements—to inform borrowers of final costs at settlement.
?Servicing Disclosure Statement—to inform the borrower whether another financial institution
may be servicing their loan.
?Settlement Cost Booklet—provided within three days of application to inform the borrower of fees
involved in home purchase settlement.
There are three categories of charges that a consumer will pay at closing. Some of the charges can change
and the Good Faith Estimate is just that ….AN ESTIMATE! Page 17 of the booklet outlines those charges that
are fixed and will not change, those that they have established a limit whereby the charges can only increase
by 10%, and those charges that have no limits. The charges that are limitless are available on the open market
and the borrow can shop for competitive rates or negotiate these charges as a condition of the contract.
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