Years of efforts to promote mortgage finance reform culminated in proposed amendments to the Real Estate Settlement Procedures Act (RESPA) in July 2002. The 93-page amendment submitted by HUD secretary Mel Martinez has three pillars: a safe haven from liability under Section 8's anti-kickback provisions for those who offer Guaranteed Mortgage Packages; imposition of tolerance levels for estimated closing costs; and recharacterization of lender-paid mortgage broker compensation as a credit to the borrower. The article analyzes these changes and the response of commenters. Mr. Kolar co-authored with attorney Nikita Pastor on this article, which appeared in Mortgage Banking magazine in February 2003. It is reprinted with permission.
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