The U.S. Department of Housing & Urban Development (HUD) enacted changes to the Real Estate Settlement Procedures Act (RESPA) that went into effect on January 1. These revisions—meant to simplify loan information and comparison for borrowers—requires lenders and mortgage brokers to provide consumers with a standardized Good Faith Estimate form.

Potentially saving borrowers up to $700 on closing fees, this new form allows borrowers to compare their initial estimate with their actual closing statement by including a reference to the original amount along with the relevant line item right on the HUD-1 Settlement Statement.

So, what does this mean for you? Ultimately, it could reduce unexpected mortgage costs and closing-day misunderstandings over loan terms. It will also help your clients find a mortgage more suited for their financial situation, hopefully leading to a decrease in home foreclosures.

Although HUD is requesting that oversight agencies exercise restraint in enforcing these new requirements for 120 days, organizations must still show a good faith effort to comply with the rules as of January 1. To help you get up to speed on this update, HUD has posted answers to Frequently Asked Questions and a pre-recorded webcast of their New RESPA Rule Seminar online.