[Update 1: clarifies HUD's comments] A sizable amount of lenders who have not complied with the Real Estate Settlement Procedures Act (RESPA) by the Jan. 1, 2010 deadline may be overestimating the initial leniency from the US Department of Housing and Urban Development (HUD), according to mortgage software provider Ellie Mae. “There are definitely folks who are scrambling as we come into 2010. Whether its banks, mortgage brokers, mortgage bankers or small lenders, I think that folks potentially underestimated, delayed and are scrambling as we sit here in 2010,” Jonathan Corr, the chief strategy officer at Ellie Mae, told HousingWire in an interview. Under RESPA and effective Jan. 1, 2010, originators must provide borrowers a Good Faith Estimate (GFE), which discloses key loan terms and closing costs to borrowers. The GFE provides pricing to the borrower early in the home buying process and must match the HUD-1 statement, which sets in stone all payables that are due at signing. Before the start of the year, Ellie Mae acquired the software firm Mavent to its line-up of RESPA-compliant software, including Encompass 360. HousingWire also reported a flurry of loan origination software (LOS) providers rushing RESPA-compliant packages to the market before the deadline. “I also think that people misinterpreted what was conveyed from HUD’s leniency enforcement in early November. Its leniency enforcement is only relevant if people are making a good faith effort to put in place the new Good Faith Estimate and HUD settlement statement to reach compliance with RESPA,” Corr said. According to an announcement from HUD on Nov. 13, 2009, the Mortgagee Review Board (MRB) will show restraint in enforcing RESPA requirements for the first four months of 2010. The MRB will not fully pursue Federal Housing Administration (FHA) approved lenders who make a “good faith effort" to comply. But, Corr said, it doesn’t mean those who have not shown a “significant commitment” to get their processes in place will avoid the consequences. “It also doesn’t mean that you’re not liable as of January 1 from a civil standpoint. The regulation is in place. You must be disclosing to consumers with the new GFE and following the disclosure timing and the tie in with the HUD-1 statement,” Corr told HousingWire, “and it’s my expectation that a lot of class-action attorneys are sitting on the sidelines to take advantage of the situation.” Corr doesn’t think the leniency announcement was interpreted the way it was meant to be interpreted, and some unknowingly believe they have more time.  He added that the amount of lenders who missed the deadline is a sizable number. “It’s not minor. I know a tremendous amount of our customers have updated, but a percentage haven’t. When I listen to what’s going on in the broader market. I don’t think it’s a massive number, but it’s not 5-or-10%,” Corr said. He said that as it pertains to RESPA, a violation has significant civil penalties. “When you start looking at the penalties there, this falls under a section of RESPA where the penalties are not minor. They are both civil and potentially criminal,” Corr said. Though the civil risks are real for a lack of RESPA compliance, there are opportunities to keep discrepancies out of the courts. “If the borrower discovers they’ve been overcharged at settlement, there’s an opportunity to correct these mistakes, either at the closing table or within 30 days. We believe this ability to cure these discrepancies will go a long way toward avoiding a more protracted complaint process,” said Brian Sullivan, a spokesman for HUD, told HousingWire. "RESPA only provides a civil right of action under Section 6 (servicing complaints) and Section 9 (requiring a particular title company)." For example, he explains, a borrower receives a HUD-1 at closing and can find on page three a line-by-line comparison between the estimated costs and the final costs. A lender can make up that discrepancy within 30 days. “RESPA gives the government the authority to pursue a criminal case against someone accused of violating the law’s anti-kickback provisions (Section 8a). Under these circumstances, the Department of Justice would prosecute on HUD’s behalf," Sullivan said. But the industry as a whole is on board, according to Ellie Mae’s Corr. “I think everybody is trying to do the right thing. There are a lot of changes. It requires an upgrade of software for most people across the board,” Corr said. Write to Jon Prior.