HUD to Broaden Help for U.S. Cities
Cities hoping to tap into the Neighborhood Stabilization Program are being stymied by investors who pay cash for distressed housing units and rent them out — a trend that worries those who believe homeownership is key to stronger communities and higher property values.
In response, HUD will broaden the pool of foreclosures that municipalities can purchase to help them buy and resell homes at affordable rates.
Banks, meanwhile, are issuing new guidelines to real estate practitioners, requiring them to give priority to local governments using federal funds to acquire bank-owned residences.
Source: San Francisco Chronicle, Robert Selna (04/26/10)
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HUD Clarifies Listing of Charges
Flat-fee disclosures combined with commissions and listed on the HUD-1 sheet get government approval in an unofficial clarification by the U.S. Department of Housing and Urban Development.
HUD attorney Helen Kanovsky explained the procedures affecting real estate practitioner commissions in a recent letter to one of the lawyers involved in an ongoing class-action lawsuit involving commissions.
Kanovsky said that the commissions and flat fees could be combined on a single line of the HUD-1 settlement sheet as long as they are spelled out in the listing agreement or the buyer’s broker agreement.
Lawyers involved in the class-action suit advise that to avoid confusion – and lawsuits – practitioners should define the commission as equal to “X” percent of the sales price plus “Y” dollars.
Kanovsky warned that if the total real estate broker fees on the HUD-1 are greater than the amount in the real estate listing agreement or the buyer’s broker agreement. HUD might review the excess charge to determine whether additional services were provided.
“Any charge for which no or nominal services are performed or for which duplicative fees are charged would violate RESPA,” she wrote.
Also, administrative fee charges without a contractual relationship with the buyer, might violate RESPA, according to Kanovsky.
Source: Inman News, Matt Carter (02/25/2010)
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New Rules to Clarify Fees
New regulations from the Department of Housing and Urban Development will require that closing costs be spelled out on a revised and consumer-friendly version of the good-faith estimate form that borrowers are supposed to receive within three days of applying for a mortgage. These rules will take effect Jan. 1, 2010.
Fees are divided into three categories:
* Fees that cannot increase from upfront estimates to closing, including lender or broker’s mortgage origination, processing, and underwriting charges, as well as lender or broker’s “points” based on the interest rate quoted and local transfer taxes.
* Fees that can increase as much as 10 percent from upfront estimates, including services such as appraisals, title insurance, and recording fees from local governments.
* Fees that can increase without limit because the amount is difficult to predict in advance, including home owners insurance, daily interest charges on the loan, and initial deposits by the borrower into an escrow account.
The new HUD-1 form will allow the borrower to easily compare what they were told the settlement fees will be with what they actually are at closing.
Source: The Washington Post Writers Group, Kenneth R. Harney (11/06/2009)
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HUD Won’t Delay New RESPA Rules
Federal regulators say there will be no further delays in implementing the proposed changes to the Real Estate Settlement Procedures Act (RESPA).
In a letter to industry groups signed by Federal Housing Commissioner David Stevens, the Department of Housing and Urban Development said it is “imperative” that the new rules be “fully operational on schedule.”
There’s still a possibility that Congress could intervene. Rep. Judy Biggert (R-Ill.), who has fought RESPA changes for more than five years, has proposed a delay in implementation of the current changes for “a reasonable amount of time.”
Banks are apparently willing to let the changes go through at this point. Wells Fargo Home Mortgage executives wrote HUD this week saying: “We have already programmed the mandated RESPA changes into over 40 computer systems and have no choice but to proceed with implementation of the new forms” on Jan. 1.
Source: Inman News, Matt Carter (10/16/2009)
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Jan 2010 changes are coming to RESPA
RESPA – Real Estate Settlement Procedures Act.
HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new HUD-1 settlement statement. New RESPA regulations were published November 17, 2008 and are scheduled to take full effect on January 1, 2010. The “New RESPA Rule FAQs” were comprised from industry questions and are posted to facilitate implementation of these new requirements.
Consumers
RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.
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