HUD Acts On RESPA
July 30, 2002
Housing Agency Expected To Loosen Up On Kickback Rules
Inman News Features
The U.S. Department of Housing and Urban Development's latest proposal to reform the Real Estate Settlement Procedures Act, known as RESPA, were published in today's Federal Register. The Federal housing agency has said its new rules are intended to simplify and improve the process of obtaining a mortgage to reduce settlement costs for home buyers.
The long-awaited changes to RESPA are expected to make it easier for real estate brokerages, lenders and title companies to earn fees on cross-selling their products without being charged with violating Federal laws that prevent kickbacks in real estate settlement services.
RESPA's mortgage lending disclosure requirements haven't been substantially revised in decades, and the industry has been awaiting the details of HUD's proposal ever since HUD and the Federal Reserve reviewed the current disclosures six years ago. The housing agency issued an overview of its recommendations earlier this year, but the 42-page section of today's Federal Register Vol. 67, No. 145 is the first formal publication of the changes HUD is proposing to fix the problems that were identified but still remain.
"Since 1998, there have been continuing changes in the marketplace, new products and greater accessibility of mortgage information via the Internet, all of which are reducing settlement costs and, if properly addressed by government, could result in greater price reductions for consumers," the Federal Register states.
The proposal most likely contains some goodies for just about every segment of the real estate industry. But it's not yet clear whether HUD has the regulatory authority to implement all of its own proposed changes or whether the final rules will prove workable in the everyday real world of real estate transactions.
The industry's trade associations no doubt are reading the fine print today and preparing their replies to what could be a revolutionary change in the business of originating home loans.
Copyright: Inman News Service