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Complex loans more costly for borrowers

HUD: Closing costs study validates RESPA reform

Complex loan arrangements raise the cost of borrowing for home buyers. Loans made by mortgage brokers are more expensive than those originated by direct lenders. Fees for title services can vary considerably. Almost half of real estate agents charge less than 6 percent commissions. Those are some of the findings of a study the Department of Housing and Urban Development says validate a proposal to simplify loan disclosures through changes to the Real Estate Settlement Procedures Act, or RESPA. HUD says the changes could save consumers $8.35 billion a year, but some industry opponents say the rule changes will increase the industry's costs and restrict competition (see story). HUD is accepting public comment on the proposal until June 12 (see story). The new study, by former HUD Chief Economist Susan Woodward, examined 7,500 FHA-backed mortgages originated between May and June of 2001. "Complicated loan arrangements raise the total costs to home buyers and increase the v...

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