Much of the current state of the economy is at least partially a result of homeowners who got in too deep purchasing homes that they could not afford. Part of the reason for this is that many home buyers do not fully understand what they are getting into when they get to the closing table.

HUD is enacting new RESPA rules that are designed to make sure that home buyers know what they are paying for. Homeowners who have a clearer idea of what and why they are paying certain fees are less likely to pay unfair loan origination fees, and closing costs. They are also less likely to get into loans that they won’t be able to pay due to increasing rates and balloon payments.

The main change would require the use of the new standardized Good Faith Estimate. The new rules would limit the amount that fees could change from the point of loan origination to closing to ten percent. They would also allow the packaging of loans and settlement services to potentially reduce costs.

While a well informed home buyer is often going to be a happy homeowner there is some opposition to creating new RESPA rules. Opponents say that the benefit to the buyer is insignificant in relation to the cost of implementing the rules. There is also concern that bundling services could limit competition.

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