RESPA decision relieves real estate groups
March 22, 2004
Industry thanks Congress for recent letter urging proposal rejection
By Samantha Peterson
Real estate industry groups are relieved by the U.S. Department of Housing and Urban Development's decision to withdraw its proposed changes to the federal Real Estate Settlement Procedures Act.
Acting HUD secretary Alphonso Jackson said this morning that HUD would review public, industry and congressional comments before resubmitting the rule to the White House Office of Management and Budget.
"Obviously, we strongly support HUD's decision to withdraw the rule," said Sue Johnson, executive director of Real Estate Services Providers Council (RESPRO), which had opposed the changes. "I think, quite frankly, that at this point in time, it was the only thing they could do. The opposition was overwhelming."
The changes, first proposed almost two years ago, sparked opposition fromgroups across the real estate industry. The original proposal netted anunprecedented 45,000 comments during the public comment period in 2002. Consumer groups weighed in, as did congressional members.
HUD submitted the proposal to OMB for review in December 2003, but the department did not publicly reveal what exactly it sent. No one knew whether it was the same as the original proposal or incorporated changes.
More than 225 members of Congress earlier this month signed a letter to the Office of Management and Budget urging the White House to reject the proposal.
The industry groups praised those members while expressing relief at HUD's decision.
The National Association of Realtors said those members "deserve the gratitude of all Realtors for the leadership they showed."
Johnson said no one knew for sure what effect that congressional letter would have, but "everyone suspected that HUD would have had to review its options after receiving that letter."
The Mortgage Bankers Association said it remains supportive of the goals of the RESPA reform, which are simplifying the mortgage transaction process while reducing costs for consumers. But the group said it agrees with the decision to withdraw the proposed rule and further review it.
"HUD's announcement to withdraw the RESPA rule is a win for consumers and the housing industry, which has been a pillar of the U.S. economy," said Kurt Pfotenhauer, MBA's SVP of government affairs, in a statement.
Ann vom Eigen, legislative and regulatory counsel with American Land Title Association, said the organization doesn't believe RESPA changes are needed, but would work with HUD in offering its take on proposed changes. The original proposal included such sweeping changes that it needed more review, she said.
"It's really a dramatic change and I think it was worthwhile for them to withdraw," vom Eigen said.
Johnson said she's hopeful HUD will respond to industry concerns and work with the groups, unlike in the past.
"One of the frustrations during this process has been, since the rule was proposed, the communication has been one-way," Johnson said.
Jackson said HUD remains committed to revising RESPA after seeking more input from Congress, as well as consumer and industry groups. He would not give a timetable for the new process.
He said he decided to withdraw because of concerns of industry and consumer groups and members of Congress, along with OMB's comments. OMB had not finished reviewing the rule when Jackson decided to pull it.
Jackson would not discuss the proposal sent to OMB. The original proposal would have changed the disclosure requirements for mortgage broker fees, including the controversial yield spread premiums, simplify the good faith estimate form and permit the sale of guaranteed-price bundled packages of mortgages and mortgage-related services.
Copyright: Inman News Features