La Jolla Real Estate, Del Mar real estate, Rancho Santa Fe Homes, Carmel Valley Real Estate, University City and
Downtown San Diego real estate, homes and condos for sale in California - Ruth Mills & the Mills Team, REALTOR.






Search the San Diego MLS
(includes all areas in San Diego County)



 November 10, 2009

New HUD Regulations Remove Surprise Closing Costs
Consumers have grown accustomed to receiving "good faith" estimates when signing to receive a loan to purchase a home. To date, consumers have been unprotected from surprise add-on closing costs when their escrow does indeed close. Borrowers have been quoted estimates in the area of around $2000 and then somehow the final costs balloon up to $3,500 on the final closing statement. In worst case scenarios, the consumer is then forced to come up with the additional charges because they were not factored into the amount of the loan.
The Department of Housing and Urban Development has been working on new rules which will oversee home real estate and mortgage transactions. These new regulations are scheduled to go into affect on January 1, 2010. Banks ands mortgage lobbyists have been hard at work attempting to put up roadblocks on the rollout. The new rules are very direct with regards to the lending industry. If a company chooses to give consumers low-ball good faith estimates on purpose, they themselves, not the consumer will be responsible to pay the difference.

As of the first of the year, loan charges and settlement fees are to be spelled out in a revised version.

Charges will be divided into three broad categories:

1. Fees which may not increase from upfront to closing statement.
2. Fees which may increase by as much as ten percent from upfront estimate to closing.
3. Fees that may increase without a set limit; fees which the lender does not have any control over. (The amount is difficult to predict several weeks in advance.)

In addition to the removing of any closing cost surprises, the new form has space on it which encourages the consumer to shop around for the best deal. There is space for up to four estimates for the consumer's comparison.

For more information regarding the new regulations and the revised HUD-1 form, visit the HUD website at www.hud.gov