Within days, the federal department of Housing and Urban Development plans to unveil sweeping proposed changes to the American mortgage application process and real estate settlement system.

The rule changes are the end-product of HUD’s five-year effort to streamline mortgage disclosures, promote comparison shopping by loan applicants, and to stamp out eleventh-hour surprises at closings — where fees come in hundreds or thousands of dollars higher than initial estimates.

Realty Times obtained a point by point summary of the proposals in advance of their official release by HUD. The changes are designed to radically overhaul the current, much-criticized Good Faith Estimates (or GFE) disclosures and the HUD-1 closing procedures.

Among the key changes in the 250-page HUD proposal:

1. Transformation of the GFE into a consumer education and shopping tool. The GFE will now explain in detail to an applicant how a particular loan works, how high monthly payments could rise, disclose any potential fees such as prepayment penalties, and provide information about escrow items.

2. New, strict limits on how much settlement charges can depart from the Good Faith Estimate stage — within three days of the loan application — to the HUD-1 closing stage. Total settlement charges could not be more than 10 percent above the initial estimates, absent tightly-defined "unforeseen circumstances" limited to acts of God, war and disasters, among others.

3. The Good Faith Estimate and the HUD-1 forms are aligned with each for easy comparison, with similar categories and graphic displays of loan origination charges and settlement cost items on both.

4. All fees paid to mortgage brokers by a lender in connection with the interest rate charged to the consumer must now be disclosed and listed on the Good Faith Estimate as a "credit to the borrower." Brokers are likely to oppose this strenuously, arguing that competing loan originators — such as retail bank personnel — are not required to disclose fees they receive in connection with higher note rates.

5. All settlement agents will now be required to "read aloud" a new "closing script" to mortgage borrowers. The script walks consumers through the various charges on the revised HUD-1, and whether and why they differ from earlier estimates. Finally, the script requires the settlement agent to explain the loan terms and mechanics as stated in the mortgage note itself.

The proposals will have a 60 day period for industry and consumer comment, after which HUD is expected to issue them in final form with a period of months set aside to allow lenders, title companies and attorneys to gear up for the new forms and procedures.

The AVERAGE HOME PRICE sold in Upper Marlboro in 2007 was $362,000. Compared to $375,000 in 2006. As of the end of December 2007 there have been just over 956 homes sold, to 1606 homes sold in 2006. Selling at the rate of around 80 homes a month in 2007, and 134 a month in 2006. The numbers show that the Upper Marlboro area numbers of sales have dropped, but the area is still an attractive market. Especially for strong buyers looking for a deal on a home closer in to the city. With a wide range of pricing, from the higher end larger homes, homes with nice size lots, and moderate homes in a very affordable price ranges. Upper Marlboro continues to offer a good selection of homes available in all price ranges for the serious buyers wanting the conveniences of a shorter commute, BUT close to the country.