HUD Issues Proposed RESPA Rule
HUD issued an extensive RESPA proposed rule (the "Proposal") to simplify and improve the process of obtaining home mortgages and to reduce settlement costs for consumers. Comments are due by October 28, 2002. The key elements of the Proposal are as follows:
Safe Harbor Exemption for Offering Guaranteed Mortgage Cost Packag
e. The Proposal creates a safe harbor exemption from Section 8 of RESPA’s prohibition on referral fees and fee-splits for entities offering borrowers a Guaranteed Mortgage Package ("GMP" or a "Package"). Lenders and mortgage brokers can choose to offer GMPs to borrowers at their option. Other entities (title companies, etc.) can offer a GMP to borrowers as well, although because the GM P includes a guaranteed interest rate on a mortgage, such entities cannot offer a Package without the involvement of a lender. The safe harbor exemption, which is not available for HOEPA loans, is conditioned upon the packager offering, without the
