Now that the new year is well underway, we thought we'd check in with HUD to see how the RESPA reform process is going, and also find out what the plan of action is regarding their RESPA enforcement Web site proposal. Curious about what's happening now? Read on.
HUD on the enforcement Web site
As you might recall, on Nov. 9, RESPAnews.com broke the story that HUD had announced via the Federal Register a proposal for the creation of a RESPA Web site Complaint Questionnaire that would "provide for a common Web site for consumers and settlement service providers to assist in the enforcement of RESPA."
The Web site would allow members of the public to submit complaints to HUD, and the agency would then "use the disclosed information to investigate alleged violations of RESPA regulations by settlement service providers."
HUD invited the public to submit comments on the proposal, with the cut-off date for submission set on Jan. 9, 2006.
We at RESPAnews.com are aware of several members of the industry who took HUD up on the offer and did submit comments, although the total number is not known. We did, however, report the opinions of one group, the American Land Title Association, who made their comments public.
Since the closing of the comment period, HUD spokesman Brian Sullivan said the process is "still under review" and that HUD is currently deciding how they want to move forward with the proposal. "Stand by for further developments," he said.
As HUD did not announce the initial proposal with much fanfare, it will be interesting to see how they proceed in announcing those "further developments." Sullivan was unaware of whether or not they would quietly slip it into the Federal Register again, or if there would be a more public statement made, in keeping with their new commitment to "openness" and "transparency" in communicating with the industry.
As always, we will be watching HUD's movements on this front very closely.
HUD on RESPA reform
Regarding HUD's progress on RESPA reform, Sullivan joked, "It's going great!"
He said that, although HUD has been primarily occupied with addressing hurricane housing issues, there has been a considerable amount of serious internal discussion going on regarding reform proposals, and that they are still committed to moving forward with it.
Sullivan indicated that the department hasn't yet come to any conclusions about what they will include in their new proposed rule, but reiterated that they want to keep the industry involved in the process. He also confirmed that HUD had not yet set a timeline for when the new rule might be out.
But in the meantime, the topic of RESPA reform continues to be discussed in industry circles, as well.
Conversation continues
A well-known Georgia mortgage broker recently told us that, for brokers at least, "On the RESPA side, a large concern is the good faith estimate. I'm not sure what is going to happen to the bundling or packaging of settlement services, because some people are already doing it, and it could be that if HUD does their thing — if they get some kind of buy-in on a GFE in terms of disclosing the same sets of figures to the consumers, which is really what should be given the priority — then I would say that they may leave the packaging issue on the table and let the industry figure out how and if they're ever going to accept packaging and do it."
He added, however, "I still say that packaging — and why NAMB's been against it — is that it encourages and promulgates dollar greed, which leads to kickbacks and things like that."
Joe Adamaitis, president of Direct Mortgage Services in Portsmouth, N.H., said that "watching RESPA reform has been extremely frustrating. You have so many people with so much input, yet the folks who can do something don't seem to embrace the theory that 'less is best.' Then you have the lenders versus the brokers, and naturally the lenders don't want to have any tightening of regulations on their LOs as we brokers do. They've got a competitive edge and they want to remain as the hammer."
He added, "If only somewhere along the way folks could unite to form a standardized format, then, and only then, would the consumer win. Consider the variety of state requirements, which if standardized, could help all involved."
The Mortgage Bankers Association has also included RESPA reform on their 2006 Advocacy Agenda, noting that they have "long supported RESPA reform," as "the current RESPA requirements are confusing to consumers and cumbersome for industry practitioners. Reform, if executed properly, would improve access to mortgage finance and lower costs to consumers. It would also limit litigation that continues to plague the industry and increase costs," they said.
"Moreover, by making the mortgage transaction more transparent, reform would reduce the possibility of abusive lending practices. The challenge, however, is to achieve reform without causing unintended consequences and even higher costs."
Cuomo: "Now is the time"
An interesting perspective on the issue has also come from former HUD secretary Andrew Cuomo, who told us that if HUD ever wants to get meaningful RESPA reform off the ground, "Now is the time."
Cuomo was the predecessor to RESPA reform's first advocate, former HUD Secretary Mel Martinez. He served at HUD from 1997 to 2001, and during that time, attempted to shake the agency out of a lengthy stupor up by instituting a massive reorganization and management reform effort, the propelling spirit of which arguably laid the groundwork for the first movements toward RESPA reform. He is planning to campaign for New York State Attorney General this year.
Cuomo explained that right now on the RESPA reform front, "The commonalities are greater than the differences. You are never going to get every one to agree on everything. That's where leadership comes in. I think this is the time where you could say 'we don't have total agreement, but we need to get this done and show some leadership.'"
He also said that now is the time for lawmakers to consider instituting other reforms, as well, such as with the GSEs and legislation such as the Ney-Kanjorski Bill.
"Transparency and disclosure must be key," he said. "If we, as officials, think the process is confusing, imagine how it is for the consumer."
He added that, as with any significant change, there will be some growing pains. "Everybody is going to have a little discomfort. Change produces anxiety.
"But the value outweighs the interim anxiety," he said.
We at RESPAnews.com will be keeping our ears to the ground for more on these issues, so, as HUD's Brian Sullivan says, stand by for further developments!