Published: June 2008

Groups ask HUD for more to reduce closing costs

Coalition: mortgage reform

Consumer Action joined in comments to the U.S. Dept. of Housing and Urban Development (HUD). The agency has proposed a rule to simplify and improve the process of obtaining mortgages, under the Real Estate Settlement Procedures Act (RESPA).

Consumer Action joined other groups in acknowledging the U.S. Dept. of Housing and Urban Development's (HUD) efforts at simplifying and standardizing the Good Faith Estimate (GFE) form that people should receive prior to closing on a home.

Groups also noted the benefit of making the estimate binding for ten days, but recommended requiring that the GFE be guaranteed for at least 30 days. These improvements to the process of obtaining a mortgage fall under the Real Estate Settlement Procedures Act (RESPA).

The groups also recommend that HUD create a loan summary sheet for settlement day that can be used to compare costs quoted on the newly proposed Good Faith Estimate Summary sheet.

They asked HUD to require that

- the annual percentage rate (APR) be prominently listed on the Good Faith Estimate

- broker bonuses (or yield spread premiums) be banned unless consumers are offered a truly no-cost loan

- home buyers be told at closing exactly what the APR on the loan is, and that there is a right of recission on refinanced mortgages

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Consumer Action, Consumer Federation of America, National Association of Consumer Advocates

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