House Financial Services Committee Votes to Suspend Use of New GFE and HUD-1 - Details

The House Financial Services Committee yesterday voted to amend the Mortgage Reform and Anti-Predatory Lending Act (the "Act") to require HUD to suspend the implementation of its new Good Faith Estimate and HUD-1 Settlement Statement, and instead to work with the Federal Reserve Board to publish a proposed joint rule with comparable Real Estate Settlement Procedures Act ("RESPA") and Truth in Lending Act ("TILA") disclosures within six months of enactment of the Act, and a final joint rule with comparable RESPA/TILA disclosures within one year of its enactment.

The amendment does not affect other portions of HUDs final RESPA rule, including HUDs new average charge pricing rules that took effect in January 2009 and a clarification that electronic disclosures are permitted under RESPA. In addition, the amendment does not affect the new definition of "required use" that effectively bans builder incentives. HUD separately has delayed the effective date of that provision and has sought comments on whether to withdraw it entirely.

The House Financial Services Committee will continue marking up the Act today. Once the amended Act is approved by the Committee, it will go to the House for a floor vote. The Senate is likely to introduce and pass its own mortgage reform bill (which may or may not include the suspension of the GFE and HUD-1 and the directive to HUD to work with the Federal Reserve Board on disclosures), after which the House and Senate must resolve any differences in a conference. 


Authored By:

Sherwin F. Root

(213) 617-5465

sroot@sheppardmullin.com