Housing Opportunity Program    RPAC    Banks in Real Estate    News Media    Online REALTOR® Ethics Training      Logos		Real Estate Settlement Procedures Act (RESPA) On July 29, 2002 HUD released a proposed rule to reform the Real Estate Settlement Procedures Act (RESPA). The rule proposes to create a more "transparent" settlement process to facilitate consumers' understanding of the true costs of their mortgage, and the functions of the originator. HUD thinks this new process will facilitate greater choice for the homebuyer in shopping for lower cast mortgages and settlement service. To that end, the Department put forward a dual approach to improving the disclosure process for costs associated with obtaining a mortgage loan, 1) a Guaranteed Mortgage Package (GMP)-grants an exemption from Section 8's prohibition against kickbacks if lender guarantees cost of settlement service package, and 2) an Improved Good Faith Estimate-places limitations on costs. The proposal also places new disclosure responsibilities on mortgage brokers. NAR supports the preservation of the current RESPA rules and opposes any broad regulatory relief for lenders who will package services. Lenders can package today without the exemption from Section 8. There has been no evidence that such a regulatory structure will result in lower costs to the consumer. NAR supports improved disclosures to ensure consumers have the information necessary to make informed decisions. NAR also recommends that any changes to RESPA be done in a slow and deliberative process. There is great concern that some of the changes contemplated in RESPA could give a competitive advantage to lenders while offering no real benefit to the consumer. The complexity of the marketplace and the uncertainty of future technology should be considered in any reform proposal. As part of its efforts in providing analysis to inform any decision regarding the reform proposals, NAR received the assistance of outside consultants in evaluating the proposals. The Downside Risks of HUD's Guaranteed Mortgage Mortgage, by Ann B. Schnare, Ph.D. Access more information about NAR's position and activities on RESPA Reform.
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