HUD to ‘exercise restraint’ in new RESPA regulations

If you’re following the evolution of amendments to RESPA (Real Estate Settlement Procedures Act), you know that HUD’s responses to industry, consumer and governmental requests to delay implementing these changes has been “no dice.”

However, HUD announced Friday that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will “exercise restraint in enforcing new regulatory requirements” that are due to take effect on January 1. This apparent change in thinking is in recognition of the challenges FHA-approved lenders are facing, and allowing some leeway for those who demonstrate that they’re making a “good faith effort” to comply with RESPA’s new requirements. HUD is also asking other federal and relevant state agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate a good faith effort to implement RESPA’s new rules.

Now, as the dawning of a new day for RESPA transactions is upon us, do we see a shift in HUD’s approach?  I think we do. We may be breathing a sigh of relief but we must recognize that this not a declaration of amnesty by HUD to allow lenders and settlement service providers to selectively choose — or ignore – the new regulations.

Sensitive to the concerns that residential mortgage industry faces for implementing these changes, HUD is recommending restraint.  Blatant disregard for the new regulations runs the risk of drawing the attention of this not-quite-sleeping giant. Enforcing entities are being encouraged to keep a mindful eye on those who work diligently to integrate these consumer-friendly changes into their day to day practices.

If you have questions or concerns about how these changes may affect you, your practice or your profession, contact legal counsel or PAR for more information.