127 Public Square

Cleveland, Ohio 44114

Regulations Division

Office of General Counsel

Department of Housing and Urban Development

451 Seventh Street, SW., Room 10276

Washington, DC 20410-0001

Re: Docket No. FR-5180-P-01

Proposed Amendments to RESPA

Thank you for the opportunity to comment on the Proposed Rule to
Simplify and Improve the Process of Obtaining Mortgages and Reduce
Consumer Settlement Cost, Docket FR-5180-P-01.

KeyCorp (hereinafter "Key"), one of the nation's largest bank based
financial services companies with assets of approximately \$101 billion,
is pleased to comment on the Department of Housing and Urban
Developments proposed amendments to RESPA, 24 CFR Parts 203 and 3500.
Key companies provide consumer finance, investment management, retail
and commercial banking, retirement, and investment banking products and
services to individuals and companies throughout the Unites States and
for certain businesses, internationally. Key has a presence from Maine
to Alaska, and we deliver products and services through a network of
branches, ATMs, affiliate offices, telephone banking centers and a
website, Key.com.

KeyBank offers a variety of mortgage loan products and services to its
retail customers including home purchase loans, refinances, and home
equity loans and lines of credit. Though we understand the need to
address many of the issues covered in the proposal, based upon our
review we believe the current proposal has the potential to
significantly increase the industry's compliance burden, be costly to
implement due to extensive programming and document changes, require
extensive employee training, expose financial institutions to increased
legal risks, and does not meet the objective to simplify the mortgage
loan process and reduce settlement costs. We have analyzed the proposed
rule and offer the following comments regarding many of the changes
included in the proposal.

**[Good Faith Estimates]{.underline}**

Though in principle we agree that a standard format to the Good Faith
Estimate (GFE) would be beneficial to a consumer, HUD's proposed change
to the GFE from a one-page document to a four-page document may inhibit
the shopping for a loan, and does not simplify the mortgage loan
process. Borrowers tend not to read the numerous disclosures they
receive as a part of the loan process, and are therefore unlikely to be
encouraged by the addition of three more pages. We appreciate HUD
recognizing the potential cost of preparing these documents and making
the underlying credit decision, and feel it is appropriate HUD has
granted originators the permission to assess a GFE preparation fee.
However, we respectfully request further clarification on what
constitutes "the cost of providing the GFE." In addition to obtaining a
credit report, we request HUD specify the time spent preparing the
document, the use of licensed underwriting software, and system
processing expenses including related materials be permitted in
determining the cost. Our concern extends how the preparation of one or
potentially several GFE's will reduce mortgage loan costs for the
borrower, and whether it will promote increased shopping for loan
products.

Since there are varying definitions of a "GFE application" and "mortgage
application" in the proposed rule, we are concerned a conflict may exist
under FCRA to pull a credit report in order to arrive at the
"preliminary credit decision". It appears lenders will now be required
to obtain a separate authorization from the customer which may add to
the cost of preparing the GFE. We encourage HUD to consider the
potential impact of repeated inquiries on a shopper's credit score.
Repeated lender credit bureau inquiries and updated file requests (if
weeks should elapse since the last inquiry) may prevent borrowers from
getting the best loan terms if their score is lowered due to the
negative impact these inquiries have on credit scores. Repeated
inquiries are an additional cost to the lender and may impact the
applicant through higher rates and GFE fees.

Key is concerned and believes the GFE being used as a loan commitment
letter increases our risk when the lender is basing the disclosure of
loan terms and fees on unverified information stated by the consumer.
Though it is common for lenders to make conditional approvals, this
usually occurs as the result of the consumer completing a more
comprehensive application which includes among other things the
collection of asset information. Also, the use of a consumer's stated
income is not reliable since it does not take into account the duration
of employment, whether the borrower is self employed, or if it includes
commission or bonus income. These elements may not be factored
accurately by a consumer, and may lead to regular changes to the
preliminary credit decision resulting in additional burden on lenders to
provide new and updated GFE's. A consumer's estimated property value may
be unreliable and may lead to erroneous payment information being
disclosed particularly if mortgage insurance is ultimately required. To
ensure the bank is adequately protected, additional information may need
to be provided with the GFE explaining the conditions of the preliminary
credit decision. All of these factors may increase the cost of preparing
the GFE which may ultimately be passed on to the consumer, and has the
strong potential to result in a negative client experience particularly
if the limited nature of the "approval" is misinterpreted. Key requests
further guidance on whether a lender is permitted to collect additional
information at the time of the GFE application in order to prepare the
GFE.

Key does not support the one-day notification of denial requirement
since it contradicts the notification requirements established under
ECOA and FCRA. The proposal omits guidelines whether the notification
can be made orally or in writing, and how lenders are to show evidence
of compliance. In the absence of clear guidance, lenders will have to
assume a written notification may be necessary as evidence of
compliance. This written notice will be above and beyond the adverse
action requirements established under the referenced Acts, and will
further increase a lender's cost of doing business.

Key is concerned about the imposition of tolerances for any fees that
are outside of our control, particularly those related to government
recording and transfer fees, survey and inspection fees, and fees
assessed by unaffiliated title companies. Key appreciates the latitude
HUD is granting lenders with respect to "unforeseeable circumstances."
However, these types of circumstances may be common and necessitate
modified GFE's being routinely sent at an added administrative cost to
the lender. This will result in higher lender fees to account for
increased administrative costs. The use of tolerances is contrary to the
concept of a "good faith" estimate of settlement charges.

Key requests that HUD evaluate the potential conflicts with current
regulations regarding the proposed definition of a "GFE application."
Furthermore, Key would recommend that a GFE only be provided in
connection with a written application ("mortgage application") for
credit. In the proposal, HUD states the GFE application not only
triggers the provision of the GFE but also requires lenders to provide
the advance TILA disclosures. This is contrary to TILA which only
requires it to be sent in connection with an application for credit.
Since TILA is triggered by a written application, there should be no
distinction under RESPA between a "GFE application" and a "mortgage
application". Additionally, there is no need for a separate GFE
application since consumers presently have the ability to shop for the
best lender and prices, and will often be granted a refund of an
application fee should they choose to go elsewhere. The GFE application
definition potentially inhibits a lender's ability to establish its own
application procedures and definition of an application for credit under
ECOA. It is also unclear on whether a GFE application constitutes an
incomplete application under ECOA. In addition, other potential HMDA
issues arise with this proposed definition. Since lenders under a GFE
application are obtaining credit reports, rendering credit decisions,
potentially declining customers for credit and issuing TILA disclosures,
it appears these requests could be considered applications under HMDA
and trigger subsequent reporting. From a HMDA perspective, GFE
applications will only increase the number of denied and 'approved not
accepted' applications appearing in a LAR file, and potentially dilute
true statistical analysis of lending practices. Since the GFE
application only requires limited information to be collected, lenders
will not have government monitoring information limiting data analysis,
and excessive costs will be incurred by lenders to geo-code these loans.
This data may also bring into question a lender's lending practices
during a fair lending exam since excessive walkaway's may be viewed as
an indication of a more significant problem.

While the proposal to combine fees appears to simplify the GFE and limit
the amount of fees the client needs to track, this has the potential to
lead to more questions about the underlying services provided for each
consolidated fee. We recommend the continuation of itemized fees. Totals
for the adjusted origination charges and total settlement charges could
still be reflected on the GFE through the implementation of a
standardized form, with attention drawn to these amounts by formatting
the form accordingly. In the absence of an itemization, there could be
inconsistencies in how each loan originator conveys what goes into each
consolidated fee, which may expose the bank to potential fair lending
and UDAP risks. The combining of fees may also lead to a consumer's
perception of hidden fees being built into the combined fee amount.

Additional guidance is requested on whether the standardized form can be
altered by lenders to add more lines in order to list more fees if
necessary, and whether any additional explanatory information can be
added.

Key recommends the "Your financial responsibilities as a homeowner"
section be removed and that these amounts be itemized on Page 1 of the
GFE. Since it appears that HUD intends these amounts to be disclosed to
clients to identify their applicability, these itemized amounts should
be included with other itemized fees along with a statement that these
estimates will vary by lender.

Key requests that the entire "Using the shopping chart" section be
removed from the GFE. We recommend HUD provide this tool within its
Settlement Cost booklet.

**[HUD-1 Settlement Statement]{.underline}**

Key is pleased to see the format of the current HUD-1 is not being
altered significantly. However, we are concerned with the significant
differences in the HUD-1 format of the proposed new GFE. The HUD-1 is
presented in an itemized format rather than the combined fee format of
the GFE, and does not follow the same chronology as the fees disclosed
on the GFE. Therefore individually itemized fees would be compared to
combined fees making a 1:1 fee comparison difficult. This may lead to
additional confusion and questions, and lengthen the loan closing
process. Key fundamentally agrees with HUD that facilitating a
comparison of the HUD-1 with the GFE would be beneficial to the
borrower. We recommends the proposed format of the GFE be similar to the
Section L of the HUD-1 be adopted so a 1:1 fee comparison can be easily
performed.

**[Closing Script]{.underline}**

Key respectfully requests the elimination of the proposed "closing
script" from the proposal due to the timing of when it is to be read and
the potential legal implications associated with the nature of the
information discussed. Key is concerned a closing agent may lack the
necessary qualifications to discuss the terms of our mortgage loan with
the client through a comparison of the GFE and Promissory Note. A
closing agent may convey information in a manner that is inconsistent
with the loan documents and inadvertently mislead a borrower to an
inaccurate conclusion regarding the product they purchased.
Additionally, the closing agent may not be informed to discuss the
reasons for all fee discrepancies. The proposal is also unclear on what
action the closing agent is to take when discrepancies arise.
Additionally, further guidance is needed on the approach to be taken if
the borrower does not attend the closing. Key believes it is the bank's
responsibility to discuss the terms and fees of its mortgage loan
obligation with the client, and the role of the closing agent should be
limited to closing the loan. Key believes questions can be asked of the
lender with the current requirement that a 1-day advance copy of the
HUD-1 Settlement Statement be provided to consumer.

**[Affiliated Business Arrangements and Required Use]{.underline}**

Key requests HUD reconsider the requirement to discount fees when
affiliated service providers are used. Lenders already provide the
Affiliated Business Arrangement Disclosure which explicitly states in a
conspicuous manner the borrower is not required to use the affiliated
provider, there are other providers who perform these services, the
borrower is free to shop around for the best rates, and lists the fees
for each of the services provided by the affiliate. Since borrowers are
not presently required to use a lender's affiliated service provider,
requiring discounted fees appears unnecessary.

We appreciate the HUD's invitation to comment on the proposed revisions
to RESPA, and welcome the opportunity to discuss our comments further
and to be of any assistance that HUD may deem proper.

> Sincerely,
>
> Ronald Dugas
>
> Executive Vice President
>
> Chief Compliance Officer
>
> KeyBank, National Association