subject: New Mortgage Rules! [print this page] One of the biggest causes for the housing bubble (and, later, it's big pop) was the difficulty and complexity of shopping for home mortgages. With so many different fees and rates and penalties and points to compare, the average home buyer had an incredibly difficult time trying to figure out what kind of mortgage was best for them, while many dishonest lenders tried to confuse consumers into more costly options. Now the Department of Housing and Urban Development are trying to help. New rules for RESPA (the Real Estate Settlement Procedures Act) that were announced all the way back in November of 2008 are finally being put into place. The changes will require that all lenders provide a standardized three-page Good Faith Estimate that helps consumers compare various offers and encourages them to shop around. Consumers are entitled to these estimates within three days of the lender receiving their loan application. Also, according to the new rules, lenders cannot increase the origination fee from the one listed on the estimate. Other fees can be increased, but only if, combined, they add up to 10% or less of the original estimate. Estimates for other third party charges, such as homeowner's insurance and title insurance, are not subject to such limits. Speaking of title insurance, the new estimate forms inform consumers that they do not have to choose the insurer suggested by their lender and, once again, are encouraged to shop around for the best rate. Back in July, the Fed also proposed some changes in the Truth in Lending Act that would bar brokers and loan officers from steering people from one type or loan or another, which will hopefully allow consumers to avoid the mortgage messes that they allowed themselves to be led into a few years ago. Some in the industry are not pleased with implementing these changes at all, while others feel that they may not be enough to make any real difference. But most agree that something, at least, is better than nothing.
New Mortgage Rules!
By: Lee Cameron
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