On July 11, just ten days before its rule-writing authority transfers to the new Consumer Financial Protection Bureau, HUD published revisions to Regulation X. The revisions generally address issues already covered in the Frequently Asked Questions and the RESPA Roundup. HUD did not touch any of the really screwed up issues that continue to plague lenders around the nation. The major revisions are summarized:

  • The lender is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The lender may, at its option, charge a fee limited to the cost of a credit report. The lender may not charge additional fees until after the applicant has received the GFE and indicated an intention to proceed with the loan covered by that GFE. (We are aware of a number of lenders cited for failing to document the borrower’s intent to proceed. In several cases lenders have been required to refund all fees, other than the cost of the credit report.)
  • Section 3500.7(f)(5) clarifies that whenever the borrower’s interest rate is locked, a revised GFE must be provided to the borrower showing the revised interest rate-dependent changes and terms within 3 business days.
  • The instructions for the HUD–1 provide that the HUD–1 form is to be used as a statement of the actual charges and adjustments. If the borrower, or a person acting on behalf of the borrower, does not purchase a settlement service that was listed on the GFE (e.g., owner’s title insurance), there should be no amount entered for that service in the corresponding line on Page 2 of the HUD–1, and the estimate of the charge from the GFE should not appear on the comparison chart on Page 3 of the HUD–1.

The revisions are effective on August 10, 2011.