RISMEDIA, June 16, 2008-The National Association of Realtors® has asked the U.S. Department of Housing and Urban Development to amend its proposed changes to the Real Estate Settlement Procedures Act. In a comment letter, NAR expressed concern and dissatisfaction with HUD’s proposed reforms and asked the agency to simplify the procedure and improve the disclosure requirements for mortgage settlement costs.
“As the most trusted resource for real estate information, Realtors® have an important stake in RESPA reform,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “Real estate brokers and agents operate their businesses locally and achieve success through client satisfaction. Business is obtained by providing clients with a successful home buying experience that results in finding the right home, and securing an appropriate mortgage and high-quality settlement services at competitive prices.”
NAR supports greater transparency in the settlement process and reform that is focused narrowly on simplification, including clear disclosures provided early in the home buying process. “We need to work together to help consumers identify the mortgage product that provides the optimal combination of cost and value,” Gaylord said. “However, we question the wisdom of undertaking what HUD acknowledges is a major overhaul of the rules that will require significant time and expense to implement at a time when the housing and mortgage markets are already in disarray.”
NAR believes the proposed rule fails to strike the right balance between simplification and understanding. “The Good Faith Estimate and the standard HUD-1 document should present information uniformly. This change would help consumers better understand whether the terms and expenses that were disclosed during the application process are identical to those presented at time of closing.”
In its letter, NAR noted that it does not support the other proposed reform provisions. Provisions in the proposed rule on cost reduction are anti-competitive and will reduce the quality of settlement services; “required use” modifications and average cost pricing will have negative unintended consequences; and the proposed rule underestimates the cost of implementation and overstates the benefits.
Gaylord noted that NAR believes HUD’s efforts to modernize RESPA have been well-intentioned. “The proposed rule, however, is cumbersome, confusing, goes far beyond what was envisioned after HUD’s public roundtables, and is not likely to yield benefits in the real world.”
NAR has asked HUD to withdraw all elements related to price controls and focus on simply reforming the Good Faith Estimate to make it easier to understand for home buyers.
For more information, visit www.realtor.org/RESPA.