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Statement of Need: The rule is needed to simplify and improve the process of obtaining a home mortgage, to lower costs for consumers. The current disclosure requirements under RESPA have not been substantially revised in several years. The proposed rule was of significant public interest. By the end of an extended public comment period on June 12, 2008, HUD had received approximately 12,000 comments (although many were identical form letters submitted as part of letter writing campaigns). Many commenters on the March 14, 2008, proposed rule – including consumers, industry representatives, and federal and state regulatory agencies – supported the concept of better disclosures in general, and commended both HUD's efforts and particular provisions in the proposed rule. HUD also received a considerable number of comments about many aspects of the proposed rule from mortgage industry representatives, including requests that HUD withdraw its proposal entirely, or that HUD postpone its current efforts in order to work with the Federal Reserve Board to arrive at a joint regulatory approach. HUD takes these mortgage industry comments very seriously and appreciates the concerns raised by these commenters. HUD’s strong view continues to be, however, that improvements in disclosures to consumers about critical information relating to the costs of obtaining a home mortgage, often the most significant financial transaction a consumer will enter into, are needed, and that such disclosures are a central purpose of RESPA. Moreover, given the current mortgage crisis, the foreclosure situation many homeowners are now facing because they entered into mortgage transactions that they did not fully understand, and the prospect that future homeowners may find themselves in this same situation, HUD believes that it is important that the improvements in mortgage disclosures made by this final rule move forward immediately.

Summary of the Legal Basis: The Secretary is authorized to prescribe such rules and regulations as may be necessary to achieve the purpose of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2617).

Alternatives: The Department considered and acted upon several non-regulatory alternatives prior to issuance of the March 14, 2008, proposed rule, but determined that the changes in the marketplace and recent judicial decisions called for new regulations on the part of HUD. As part of its review of the public comments on the proposed rule, HUD will consider, and possibly adopt, alternatives to the regulatory requirements contained in the proposed rule.

Anticipated Costs and Benefits: The nation’s home mortgage market is a billion-dollar industry. Accordingly, as was the case with the preceding proposed rule, there are costs and benefits associated with this rule that will be addressed in the Economic Analysis that will accompany the final rule. The Economic Analysis has identified a wide range of benefits, costs, efficiencies, transfers and market impacts. It estimated that borrowers will save $8.35 billion in origination and settlement charges. The total one-time adjustment costs to the lending and settlement industry of the proposed GFE and HUD-1 are estimated to be $570 million. Total recurring costs are estimated to be $918 million annually. Because there is a twelve-month implementation period, only the one-time adjustment costs will be realized over the next year.

Risks: This rule poses no threat to public safety, health, or the environment.