ALTA® Provides Input to HUD on RESPA Reform
|July 14, 2005|
Introductory Comments Of Mark A. Bilbrey,|
Warranty Title And Abstract Co. Of El Reno, Oklahoma, on Behalf Of The American Land Title Association at the HUD Roundtable on RESPA [pdf]
WASHINGTON--July 14, 2005--The American Land Title Association (ALTA), the national trade association for the title insurance industry, today provided the Department of Housing and Urban Development (HUD) with eleven principles which the association believes should guide reform of the Real Estate Settlement Procedures Act (RESPA). ALTA was one of several dozen participants in a RESPA reform roundtable discussion held today at HUD Headquarters in Washington, D.C.
"We appreciate that Secretary Jackson recognizes the need for consensus building in this area, and we appreciate the opportunity to be involved in these roundtables," said Mark Bilbrey, president of ALTA.
ALTA believes that because of the nature and importance of the residential real estate and mortgage finance markets to this country, HUD should avoid sweeping changes that would dramatically alter current practices unless there is a clear and demonstrable basis to believe that such change will not seriously disrupt those markets.
"ALTA believes that market-based approaches are working and developing," commented Bilbrey as he prepared for the roundtable. "Regulations effectively mandating bundling of services could hinder development of more efficient markets and discourage development of alternative delivery systems. Regulatory packaging could severely hurt ALTA's members, which are mostly small businesses. Ultimately, we believe any reform proposal should encourage fair competition, promote consumer choice and empowerment, and provide for meaningful disclosure of the costs associated with buy/sell or refinance transactions."
Principles That ALTA Believes Should Guide HUD's Consideration of RESPA Reform
1) Market-based approaches should be given an opportunity to work before regulatory directives are imposed. Regulations effectively mandating bundling of services could hinder development of more efficient markets, and technology is allowing for development of new channels. Such packaging may discourage development of alternative delivery systems. Current market developments, such as the Mortgage Rewards and One Fee package, demonstrate that packages are already reaching the marketplace.
2) Proposals must be sensitive to the important role small businesses play.
3) Any approaches that are considered must recognize the fundamental differences between refinance transactions (in which only the borrower and lender are involved), and the "buy/sell" transaction (in which the loan transaction is incidental to the sale transaction between the seller and the buyer and provided for their primary benefit).
4) Because of the nature and importance of the residential real estate and mortgage finance markets, HUD should avoid sweeping changes (whether to the RESPA statute or to HUD's regulations) that would dramatically alter current practices unless there is a clear and demonstrable basis to believe that such changes will not seriously disrupt those markets.
5) Consumers (who include sellers as well as buyers/borrowers) should have maximum freedom in selecting settlement service providers that will be providing services to them. Settlement service providers who provide services to buyers and sellers should never be precluded from having direct competitive access to those customers.
6) Regulatory approaches must be consistent with the existing RESPA statute. Proposals for more fundamental reform of the RESPA framework (including proposals that necessitate significant exemptions from Section 8) can only be achieved through statutory amendments.
7) HUD may not preempt state laws unless those laws are inconsistent with the provisions of the RESPA statute. Inconsistency with HUD regulations is not a basis for preemption.
8) Approaches that would enable one party with economic leverage (e.g., a "packager") to use that leverage to obtain kickbacks or reductions in charges from other settlement service providers as a condition to participation in the package - where such kickbacks or reductions are not passed through to the consumer - must be avoided. Additional "packaging" fees should be avoided.
9) Uniform closing instructions which reduce lender and settlement costs should be explored.
10) The Good Faith Estimate should accurately reflect likely prices that the consumer will have to pay in the particular market, rather than merely providing broad ranges of prices that do not provide meaningful information about the reasonableness of the ultimate charge.
11) HUD should clarify that "average cost pricing" is not a Section 8 violation.
-------------------------- About ALTA
The American Land Title Association represents title insurance companies and their agents nationwide on a variety of industry and legislative issues. Members of the Association search and insure land titles to protect real estate investors including homebuyers and mortgage lenders. For more information, visit ALTA's Web site at http://www.alta.org.