Major changes to RESPA have been proposed. These changes are extensive and they are costly. Join BOL Gurus Mary Beth Guard and Jack Holzknecht for a comprehensive analysis of this significant new proposal. Register Now!
HUD has provided several tables of estimated costs involved in complying with these new rules. The following recap of these costs may be of interest to you and senior management as you decide whether or not to submit a comment letter.
Compliance Costs of the Proposed Rule
These costs assume 12.5 million loans are done annually. The per loan cost estimate is that compliance with the new GFE disclosure rule will cost $44.40 per loan. Compliance with the new HUD-1/1A disclosure rule will cost $54.08 per loan.
As an industry, one-tme costs involved in compliance for these two disclosures are estimated to be $570,000,000. The recurring costs for compliance are estimated to be $1,231,000,000.
One Time Software Upgarde and Training Costs of the New GFE
The cost for the industry is estimated to be $91,042,558. Mortgage brokers have the largest part of that cost estimated to be $61,267,428 while credit unions have the lowest expense at $2,569,710. Commercial banks costs are estimated to be $11,647,288, with mortgage banks paying out $10,308,241 and thrifts paying $5,249,891.
One-Time Legal Consultation Costs on the New GFE
HUD recognizes that new costs will be paid as a result of the new rules. One-time legal expenses are estimated to be $115,874,000 for the industry. These estimates are broken down by entity category as follows:
Mortgage Brokers
$73,219,520
Commercial Banks
$2,053,150
Mortgage Banks
$1,551,500
Thrifts
$974,750
Credit Unions
$420,600
One-Time Training Costs on the New GFE
With any regulatory change there will be training costs you will have to pay. One-time training expenses are estimated to be $193,591,648 for the industry. These estimates are broken down by entity category as follows:
Mortgage Brokers
$134,522,236
Commercial Banks
$22,653,771
Mortgage Banks
$21,285,461
Thrifts
$9,981,440
Credit Unions
$5,148,741
Incremental Costs of Third Party Pricing Arrangements for the New GFE
It is estimated that the additional disclosures will take an estimated 10 to 20 minutes more per loan. Basing this time on 12.5 million loans annually at a rate of $72 per hour, the industry cost will be $300,000,000. These estimates are broken down by entity category as follows:
Mortgage Brokers
$180,000,000
Commercial Banks
$49,275,600
Mortgage Banks
$37,236,000
Thrifts
$23,394,000
Credit Unions
$10,094,400
For the above industry costs, $970,508,206 represents a one-time expense to be paid to comply. Recurring costs will amount to $1,531,000,000 annually.
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.
Print Friendly!
Email This Article!
Discuss NOW!
