WASHINGTON -- Remember the bad old days of 11th-hour mortgage settlement cost shocks and mystery junk-fee charges? Remember when the "good-faith estimates" your lender gave you upfront said closing costs would be about $2,000, but somehow they ballooned to $3,500 on the final settlement sheet?

Worse yet, you had to come up with the extra money to handle the surprise costs or the home purchase or refinancing could not proceed. Those days are still here -- consumers continue to be unprotected from closing cost shocks or intentional lowballing of fees -- but in about eight weeks the situation should change dramatically.

Though banks and mortgage lobbies are pushing hard for a delay, on Jan. 1 new federal rules adopted by the Department of Housing and Urban Development are scheduled to take effect covering home real estate and mortgage transactions nationwide. The rules have a blunt message for lenders and others who lowball upfront estimates or lard on junk fees at settlement: Play games like that, and you -- not your hapless customers -- will have to eat the difference.

Here's what's about to happen: Starting Jan. 1, loan charges and settlement fees will be spelled out on a revised, more consumer-friendly version of the good-faith estimates (GFE) form that borrowers are supposed to receive within three days of their mortgage applications. Charges will fall into three broad categories on the form:

-- Fees that cannot increase from upfront estimates to final closing.

-- Fee estimates that come with wiggle room, and can increase by as much as 10 percent in the aggregate from upfront estimates.

-- Fees that can increase without limit, mainly because the lender has no control over them or because the amount is difficult to predict weeks in advance.

Charges in the zero-increase category include the lender's or broker's mortgage origination, processing and underwriting charges, where junk fees sometimes sprout out of nowhere -- or increase significantly -- from upfront estimates to closing. Also in this category are the lender's or broker's loan discount charge or "points" based on the interest rate quoted to the borrower, and local transfer taxes. Continued...