ALTA® OPPOSES HUD’s PROPOSED RESPA REGULATIONS
|March 30, 2003|
ALTA® Supports Revisions to RESPA Promoting Small Business & Empowering Consumer Choice
In July 2002, HUD issued proposed revisions to its Real Estate Settlement Procedures Act (RESPA) regulations that would fundamentally alter the way in which mortgages and real estate settlement services are marketed and priced. Comments were due October 28, 2002. The proposal would scrap the existing rules and forms for the disclosure of settlement cost estimates by lenders that have been in place for almost 30 years and substitute two radically new regimes. Under a “Revised Good Faith Estimate with a Tolerance” regime, lenders would provide binding estimates only for major categories of lender and settlement charges, with a requirement that the final charges for those categories not exceed the estimates (or exceed them only by limited tolerances). Under the second regime, lenders could provide consumers with an abbreviated disclosure, and would be given an exemption from the antikickback provisions of Section 8 of REPSA, for a “guaranteed package” consisting of a loan and all settlement services.
ALTA supports settlement services legislation or regulations that promotes small business and consumer choice, requires meaningful disclosure, and that would enhance a consumer’s ability to shop effectively for settlement services. HUD’s current packaging proposal does not achieve these goals and would have many adverse effects.