Thanks a bunch - I'll be subscribing to this!

If you want the low-tech version, you can call 1-800-660-0080 and talk to George. That's if you want to hear a friendly voice.

Thanks for the link to ALTA. This HUD proposal is the result of pressure from many different interest groups ranging from consumer advocates to ALTA, mortgage bankers and the like. It is important for bankers to understand other points of view and where the pressures are coming from. So folks, pay attention to what other interest groups are saying. Anyone who doesn't comment on this proposal has to stop complaining -- and then what would we do for fun?

Very good article, Howard. This proposal has a LOT of problem areas for lenders and brokers. Everyone needs to read the proposal and see how it will affect your shop. If passed as is, we will all have VERY big problems. Some of the problems I see are:

Some fees should be separated out, always. How can borrowers take advantage of tax credits if the fees are not listed individually on the HUD?

What will packaging do to the TIL? Lenders will have to state what the items are but not the individual charges?

If borrowers have 30 days to accept the GFE on a GMPA, and the lock is for 90 days, then the lender has to have a 120 day lock with the investor, driving up the cost of the loan to the borrower.

Packaging will concentrate risk for the lenders as lenders will have to "approve" GFE's submitted by brokers.

Brokers are not required to issue TILA information. The new GFE contains APR. This goes against some state laws.

They will allow the borrowers to estimate purchase prices and values of the property, but still want the lenders to guarantee the GFE fees based on the borrower's estimates.

Lenders will over estimate closing costs to stay within the 10% tolerances. The 10% is on individual categories, thereby reducing the overall tolerance level.

No fees can be collected by a lender until the GFE is issued. A credit report (credit scores) assists a lender in determining the type of loan program a borrower qualifies for. Lenders should not be required to pull credit on a borrower if they cannot charge for the credit report up front.

If the YSP is paid directly to the borrower and the borrower uses these funds to pay down the interest rate, this amount would go into the calculations for a HOEPA loan, most likely classifying the loan as a HOEPA loan.

The time frames given are not sufficient for systems to be revamped, forms to be reprogrammed, training of staff, procedures written, etc.

There are many, many more issues. Too numerous to mention here. Everyone needs to pass this proposal out to your higher powers for review and discussion and then get on your soapbox and formulate your comments to HUD! We cannot allow this proposal to pass as is. This proposal was written totally without the rights of lenders in mind.

This proposal makes me ask: Are there any grown ups in charge at HUD?

I guess I missed that.

Additional edited rant:
Until Al's post of the link, I couldn't get the .pdf version of the rule, and since I hate reading the text version off the 'net, I skimmed the preamble and only read the proposed language changes in detail. I expected the change to be there, and so of course was disturbed that I didn't see it.

Then, I read Howard's wonderful draft article, and discovered that the information was in the preamble, not the actual rule. I'm with Howard. That's ridiculous.

Then I remembered Lucy's favorite RESPA saying:

HUD spelled backwards is.....

HUD doesn't think that lenders have rights. HUD also thinks it operates in a vacuum - no prior legislative initiatives - no prior regulations. I'm convinced that HUD believes it is the only party involved in the mortgage lending process who has the best interest of the consumer at heart, therefore they feel free to act arbitrarily without support of fellow regulators while totally ignoring the duties that banks have under other regulations. Are they so uninformed that they don't know that the customer receives an early Truth in Lending Disclosure with APR, prepayment penalties and so much more? OR, do they just want to have it in their shop?

Louvera, is that their mission statement you wrote?

I'm so glad it's Friday!!!! I must admit to being tired and rather frustrated by the items I've been reading today. The proposed RESPA revisions and a lovely article in ERisk about how bankers have traditionally been unethical and it's okay for special interest groups to blackmail them into no longer providing loans to perfectly legal business entities have made me so glad I'm in this business. If only they would let us, the sage compliance professionals, write their mission statement!

I think you might need that umbrella drink more than anyone else!

After a nice, relaxing weekend, everything will be better! OK, it really won't - but you'll be better able to take it on for a few more days.

After what I have read of the RESPA proposals, combined with the HMDA revision for 2004, I will make a serious recommendation to management that we simply discontinue home equity loans. The hassle and expense for the few loans we make now is simply not worth it. ...And this is from a bank that doesn't charge any fees on Home Equity loans.

Score another victory for the consumer...NOT!!!

Perhaps THAT should be my comment letter to HUD?

Oh - and one more rant (and it's Saturday for pity's sake...)

When I had some trouble with my OWN mortgage loan - the originating lender sold the loan, and the purchasing lender erroneously reported me as LATE on my 1st month's payment (seems there was a squabble between the selling and buying lender over the rights of the 1st payment in the pool) - I sent a complaint letter to both lenders with a copy to HUD.

HUD's response was bascially - "Thanks for writing to us, however it's not our job to do anything about this kind of situation."

Yeah - THEY have the best interest of the consumer at heart... From the perspective of a consumer harmed by the actions of a lender (it took a year to get the late payment report off of my credit bureau) HUD is a pure waste of time and taxpayer money!

In reply to:

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...I will make a serious recommendation to management that we simply discontinue home equity loans...
Perhaps THAT should be my comment letter to HUD?

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It should. They need to be aware of the impacts of the rulings.

Bonnie, why don't you tell us how you really feel?

What new HMDA and RESPA rules????? Did I miss something??
Just kidding. Cleopatra ain't the only Queen of DE-NILE!!!!!

Let me get back to my piles of the new rules or what I like to call my own personal "stack of agony". When I can't take it anymore, I'm going to work at Subway.

Shelley
Honorary President,
WE HATE HMDA, INC

I believe we, in Georgia, are going to have a pricing problem with the new RESPA if it is implemented as proposed. Basically, they want us to lock in the interest rate 30 days in advance. Normally, that wouldn't be a problem. But, on October 1, 2002 it will become one. Our home loans will be adjudicated as covered/high cost based on the rates in effect 10 days in advance of closing. How are we going to guarantee a rate 30 days in advance if we are going to be held to a different standard by the state? We had several years where the rates just didn't move - but they've been moving a lot lately. How will we measure that risk? How can we predict what they will do 20 days before we will be held accountable for our rate lock by the state?

This is an excellent point to raise in your comment letter. HUD staff simply ignored state laws relating to contracts, usury, and similar issues. The proposal is naive and your example would help to show that they have really over-reached.

Thanks, Al
Our Mtg. Ln Mgr. just asked me a question about this issue.
The Mgr. just got a call from a mtg. broker, saying that we can pay a referral fee. The Mgr. replied, "I thought that was a violation of RESPA?" Your posting the link to HUD's proposed rules gave me just the info. I needed to share with the Mtg. Ln Mgr. (she can read it and weep!)
These threads are some of the most informative discussions to date that I have read on BOL. Thanks again.

Larry Platt also published his two cents at http://www.inman.com/InmanStories.asp?ID=31296&CatType=R

I have a question about how the 1999 and 2001 Statements from HUD are being interpeted by mortgage lending with respect to RESPA and the payment of fees to mortgage brokers, loan agents and the like. American Fidelity is asking loan agents to sign an agreement which outlines the services they are to perform to be compensated for in compliance apparently with HUD Statements regarding the payment of "earned fees" which HUD believes are legal under
RESPA. Now that the new rules proposed by HUD have hit the fan, and suits such as the Culpepper case and others may be
reviewed by the U S Supreme Court, what, if any weight should be given to HUD's Statements of 1999 and 2001. Any thoughts on these issues. Our Mtg. Dept. want to know what constitutes legal fees paid to a mtg. broker based upon the HUD Statements of 1999 and 2001? What happens if the Supreme Court finds these YSPs and SRPs violate RESPA?

I probably would not want to hazard a guess one way or the other after HUD published its proposed rule. The proposed package agreement structure appears to undercut the prior policy statements, but they can be distinguished from the latest proposal. Considering that the Sixth Circuit recently disagreed with an FRB interpretation of TILA, I cannot guess what level of deference the Supreme Court would give to HUD's policy statements.

About as much deference as DUH (Oops, I did it again!) deserves, which ain't much.

I was wondering if I am the only one that noticed this - or if I didn't read it close enough - but in the supplementary information discussing the GMPs it states that HUD would establish a "carefully circumsized safe harbor under RESPA" for GMP transactions and that any entity (a lender, broker, other settlement service provider, or other entitty), hereinafter a "packager", may qualify for this safe harbor. However, in the text of the proposal under III.C.2. , "Who May Package", it states, "Under this proposal, entities other than lenders may qualify as packagers for a safe harbor..."

Did I read too much into that?

Thanks for the help!

Mary B
(computer appears to have lost my cookie to remember my password!)

Whew! This was one heck of a scare.

In reply to:

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circumsized safe harbor

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The word is circumscribed.

I'm glad you cleared that up! I wanted to ask, but I was afraid I would get way too much information if I did!