HUD Submits Draft Rule for RESPA Reform
WASHINGTON -- In spite of opposition from NAFCU, CUNA and hundreds of lawmakers in the House of Representatives, the Department of Housing and Urban Development has submitted to the Office of Management and Budget a draft final rule for Real Estate Settlement Procedures Act reform.
CUNA Senior Assistant General Counsel Jeffrey Bloch indicated in an e-mail to Credit Union Times that HUD is committed to finalizing the rule before the end of the Bush administration, regardless of the opposition from industry. He added that to make this deadline, HUD needed to send the rule to OMB for review as soon as possible. The rule, which would streamline RESPA regulations, was sent to OMB for clearance on Aug. 21.
HUD said it needs to move fast to help homebuyers. "The current housing finance situation has dramatically highlighted the need to move forward responsibly and expeditiously with measures to help American homebuyers," HUD Assistant Secretary Sheila Greenwood said in a letter to Reps. Ruben Hinojosa (D-Texas) and Judy Biggert (R-Ill.).
Hinojosa and Biggert gathered signatures from 240 legislators in the House and dozens of industry groups for a letter sent to HUD on Aug. 7 opposing the proposal as complex and confusing. The signatories to the Hinojosa-Biggert letter also said HUD's attempt at RESPA reform did not reflect a consensus within the industry regarding the necessity for rulemaking. In fact, the criticism of the rule was so strong that they also asked HUD to scrap its proposal and to work with the Federal Reserve Board to craft a new rule.
HUD's Greenwood told Biggert and Hinojosa that the agency was "carefully considering" the scores of comment letters by industry groups, consumer groups and other interested parties and that HUD would, as a result, make the appropriate modifications to the proposed rule.
HUD did not return calls asking which modifications to the 96-page, triple-spaced rule had been made as a result of the opposition.
RESPA regulates closing costs and settlement procedures, requiring that consumers receive disclosures at various times in the mortgage transaction and outlawing certain types of payments to mortgage brokers.