HUD to take a fresh look at improving the mortgage settlement process
June 27, 2005
Unveils new RESPA Website
WASHINGTON - Housing and Urban Development Secretary Alphonso Jackson today outlined HUD's timetable to develop modern mortgage rules that regulate how American consumers buy and refinance homes. The Department's roadmap for reforming the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) will include three informal meetings in July and August with consumer organizations and industry representatives. To read HUD's formal announcement of these roundtables, visit HUD's website.
In addition to these Washington roundtable discussions, the Small Business Administration and HUD will co-sponsor meetings in Los Angeles, Chicago and Fort Worth to listen to the unique concerns of smaller real estate and settlement service providers with an interest in RESPA reform.
"Simplifying and improving the way consumers buy and refinance homes in this country will drive our campaign along this road to reform," said Jackson. "There is universal agreement that current regulations can and should be improved to allow even more families to share in the American Dream."
Beginning next month, the Department will host three roundtables with members of industry and consumer organizations (July 14, July 28, and August 18). Participation in these sessions is by invitation and is focused on those individuals and groups that offered an analysis of HUD's 2002 RESPA reform proposals or offered alternative reforms for HUD's consideration. The purpose of these sessions is to stimulate a meaningful exchange of ideas among participants over the substance of new RESPA reform proposals, not to reach consensus through negotiation.
Jackson added, "I understand that with so many competing interests, it will be difficult to make everyone happy. But I promise that before we put pen to paper, we will carefully consider the input from consumers and industry alike. I want to repeat my cardinal rule for RESPA reform: I am more concerned with doing this right, than doing it fast."
Today, buying a home is too complicated, confusing and costly. Each year, Americans spend approximately $55 billion on closing costs they don't fully understand. For most other purchases a consumer makes, the bottom line price is clear and firm. Over the last three decades the mortgage industry has experienced substantial and dynamic change while HUD's disclosure requirements have remained essentially the same.
RESPA became law in 1974 to provide consumers with advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. Nevertheless, consumers complain that when they reach the closing table, they don't understand the charges and often pay more than they anticipated. In addition, homebuyers are severely limited in shopping for settlement services that could significantly lower the cost of homeownership.
Homeownership is at record levels with increasing numbers of families either purchasing their first home or taking advantage of low interest rates to refinance their existing home mortgages. Yet downpayments and closing costs remain the greatest obstacles confronting potential homebuyers. Creating a simpler, more transparent and less expensive homebuying process will allow even more families to purchase a home or refinance their existing mortgage terms. For more information about reforming the mortgage settlement process, visit HUD's new website devoted to providing the latest information on RESPA reform.