HUD charges ahead on simplifying home-buying process

June 28, 2005

Forums for feedback on RESPA reform begin in July

By Janis Mara
Inman News

HUD Secretary Alphonso Jackson The U.S. Office of Housing and Urban Development is holding "at least six" meetings with consumers and industry representatives this summer to discuss reform of rules regulating how U.S. consumers buy and refinance homes.

Reform of the Real Estate Settlement Procedures Act, or RESPA, has been an issue for years. Alphonso Jackson, U.S. Housing and Urban Development secretary, in late April promised members of a national mortgage banking association to seek their input on reform of RESPA.

The housing agency has attempted to simplify the home-buying process for consumers by making changes to RESPA, which regulates the closing process.

The new effort will begin with a series of national forums for consumer and industry groups in July and August and is expected to wind up with a new set of proposals, HUD announced today. The meetings will seek input from the various groups.

"I want to make sure each step along the way is open and transparent," Jackson said in a conference call today announcing the forums. "I am more concerned with doing it right than doing it fast."

Though HUD is seeking input, Jackson said the process would not be "negotiated rulemaking," in which the participants help craft the rule. He emphasized that the discussions would take a fresh approach.

"Disclosure, packaging and improving the good faith estimate" are issues that will be the basis of discussions, a spokesman said in the call today, though Jackson and the spokesman emphasized that anything and everything is open to discussion. "The issues are not going to change, but how you look at them and who is looking at them has changed."

HUD's previous attempts to make changes to RESPA to simplify the home-buying process for consumers came to a halt in March 2004 when Jackson withdrew the agency's proposal from the White House Office of Management and Budget. At that time, Jackson said HUD would reexamine the rule, revise it if necessary and re-propose it.

The original changes, proposed about three years ago, netted an unprecedented 45,000 comments during the public comment portion in 2002. Many of those came from within the real estate industry in opposition to the changes.

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. The changes aimed to make it easier for home buyers to understand the closing process.

Asked what was different from the last time HUD proposed a rule, the spokesman said, "Mr. Jackson is involved. That's a big difference."

Tacitly acknowledging the myriad interests sometimes at odds in such a procedure, Jackson said, "Not everyone may agree, but before we put pen to paper we will listen to the concerns of our stakeholders."

"To the extent that Mr. Jackson can use his personal credibility to bring consensus among the various interest groups, that would be a wonderful thing," said Jeffrey Arouh, a leading RESPA attorney.

"I have my doubts as to whether some of the issues are capable of being resolved because of the potential impact that it and they will have on the interested parties. I think the idea of a packaging proposal that is acceptable and capable of being put into place would be welcomed by a number of participants in the industry," said Arouh.

Three informal meetings will be held in July and August at HUD's headquarters with representatives of the industry, including lenders, mortgage brokers, real estate brokers and agents, title companies, appraisers, and other settlement service providers, consumers, and others.

During this period, HUD will co-sponsor with the Small Business Administration three small business roundtables in Los Angeles, Chicago, and Fort Worth. The purpose of the roundtables is to listen to individual views, allow participants to exchange views, and gather information on possible changes to HUD's RESPA regulations.

HUD has also established a Web site for information on the meetings and RESPA reform in general at

The first Washington, D.C., roundtable will be held July 14, followed by a Small Business Administration joint roundtable in Los Angles on July 21. The following week on July 28 will be the second roundtable at HUD headquarters, followed by the second SBA roundtable in Chicago on Aug. 4. The third SBA roundtable will be in Fort Worth on Aug. 1 and the third roundtable at HUD headquarters will be Aug. 18, a spokesman said.

The invitees comprise a veritable "Who's Who" of the various industries involved, including the Mortgage Bankers Association, the National Association Realtors and a number of consumer groups. A full list is available at

"Until you see the proposal it's hard to say whether it will be good or bad. But the idea of having something back out there we can look at and evaluate and hopefully put into place is good. We'd love to have something that would benefit the consumer," Arouh said.

Copyright 2005 Inman News

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