More on HUD's Decision to Exercise "Restraint" in Enforcing New RESPA Rules

Last Friday HUD announced that it would exercise "restraint" in enforcing the new RESPA provisions set to go into effect on January 1, 2010 that deal with the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement. We passed this story along here.

What we have questioned is the effect of this decision: Does delay of enforcement mean a delay in implementation, or are lenders still going to go live with the new forms on January 1st?

We have received strong indication from industry resources such as First American and the American Land Title Association (ALTA) that this decision is not a delay in implementation, but merely a delay in enforcement. There are still some practical considerations in some jurisdictions which make full compliance with the new rules impractical or impossible, and HUD does not want to be imposing financial obligations against companies who cannot possibly follow the new regulations.

We will continue to monitor this closely so agents and brokers know what to expect as of the first of the year. Stay tuned...

BREAKING NEWS: HUD Announces 120-Day Delay in Enforcement of new RESPA rules

The U.S. Department of Housing and Urban Development (HUD) announced today that while the new regulatory changes to the HUD-1 Settlement Sheet and Good Faith Estimate (GFE) are still effective January 1, 2010, the board overseeing enforcement of these new rules will "exercise restraint in enforcing" them. The full article from HUD.gov is here.

The likely impact is that for the first 4 months of 2010 borrowers could see either the current or the revised GFE and HUD-1 form, depending on whether the lender has implemented the changes.

We will provide more updates as we get them.

You be the Judge! Is this RESPA compliant?

Regardless of the type of market you are in, all loan officers, real estate agents and settlement agents need to be mindful of the Real Estate Settlement Procedures Act (RESPA), particularly with respect to Section 8 regarding kickbacks. Take the following quiz, and match with the answers below.

YOU BE THE JUDGE! Is this RESPA Compliant? (Answers below)

1. Lender keeps all business cards from every new application and uses them to send email newsletter of real estate issues to real estate agents?

2. Lender puts a business card from every real estate agent who sends a deal into Fishbowl for Fancy Dinner for 10?

3. Attorney has Fishbowl at Mortgage Lenders regional convention exhibit to win Big Bertha?

4. Lender visits friendly real estate Agent at open house; brings along coffee and Danish for two?

5. Lender provides catered luncheon for all agents in office every Friday?

6. Attorney brings in cold cuts and soda to real estate agents while conducting "Lunch and learn" about Condominium law?

7. Attorney pays real estate agent for Conference room rental in RE agent's office to conduct closings?

8. Lender pays Originator $100 for every 'pre-title order' she completes at time of pre-qualification?

9. Attorney pays all Lender's costs for "Staff Appreciation" party, but does not attend?

10. Real estate agent, Lender and Attorney use same ad to promote "local business' partnership?

Should you have any questions about RESPA, please do not hesitate to call or email one of our seven attorneys. If we do not know the answer right away, we'll be happy to research and get right back to you!

Attorneys: Derek Massey, Kathleen Dartez, Lee Snyder, Carol Ann Wildesen, Eric Oberer, Scott Mozingo and Elisa Kerr.

Answers: (1) Y (2) N (3) Y (4) Y (5) N (6) Y (7) Y (8) N (9) N (10) Y

NOTE: While the scenarios and the answers may be gray and represent a fuzzy rather than fine line between abiding by and violating RESPA, these are the answers as best defined by HUD today.

Mid-Atlantic Settlement Services

11350 McCormick Road Executive Plaza III, Suite 200

Hunt Valley, MD 21031

(800) 530-9372

Fax (800) 710-9918

http://www.masettlement.com/

RESPA quiz source: Mortgage Bankers Association of Maine