Judge Throws Out RESPA Rule Challenge

Inman News 
July 31, 2009
Carter, Matt

A U.S. district judge has dismissed a lawsuit against HUD by the National Association of Mortgage Brokers, which claimed that forcing brokers to disclose yield-spread premiums (YSPs) was unfair given that bank loan officers and other originators for direct lenders are not subject to like requirements. Under the new Real Estate Settlement Procedures Act (RESPA) rules slated for implementation on Jan. 1, loan originators must use a standard good faith estimate form that requires mortgage brokers to make known YSPs and provide borrowers a closing cost credit equal to those rebates. Critics worry that the YSPs can encourage brokers to steer borrowers toward more expensive loan products, sometimes keeping some or all of the rebate without the knowledge of their clients. The ruling, from U.S. District Judge James Robertson, removes one potential hurdle to implementation of new loan disclosures and other proposed revisions to RESPA.

Abstract News © Copyright 2008 INFORMATION, INC.