Is HUD the Willy Loman of residential real estate transactions?
HUD inserted several tragic flaws into its FAQ report. Like the main character from Arthur Miller’s play, “Death of a Salesman,” HUD may not recognize that 1) the FAQ contradicts the express language of RESPA, and 2) the ripples of its FAQ spread far beyond HUD’s Web page. A prime example is the FAQ explaining how to account for seller, broker and lender contributions and concessions toward closing costs. HUD’s guidance states that the GFE should only designate the borrower as the payer of fees for lender required services. The FAQ section for seller paid items and the general HUD-1 FAQ section include the following questions and answers: Q: Are charges to the seller listed on the GFE? A: RESPA requires that only the borrower receive a GFE. The GFE is defined as an estimate of settlement charges a borrower is likely to incur in connection with the settlement. Charges that typically would not be charged to the borrower, but would be charged to another party — such as the seller — do not