This memorandum revises and replaces our April 14, 2008 memorandum on this subject. On March 14, 2008, the Department of Housing and Urban Development (“HUD”) published a proposed rule to amend Regulation X. If HUD adopts this rule, as proposed, it will have a significant impact on mortgage lending and closing practices. Overview of Proposed Rule: The proposed rule is intended to: (i) revise and standardize the Good Faith Estimate (GFE); (ii) ensure that page one of the GFE provides a clear summary of the loan terms and total settlement charges; (iii) provide more accurate estimates of costs of settlement services shown on the GFE; (iv) improve disclosure of yield spread premiums; (v) facilitate comparison of the GFE and the HUD-1/HUD-1A Settlement Statements; (vi) ensure that at settlement borrowers are made aware of final loan terms and settlement costs, by reading and providing a copy of a closing script to borrowers; (vii) clarify HUD-1 instructions; (viii) clarify regulations concerning discounts; and (ix) expressly state when RESPA permits certain pricing mechanisms, including average cost pricing and discounts, and volume based discounts.

Complete Memorandum