|Acting HUD Secretary Alphonso Jackson announced Monday that he was withdrawing a controversial proposal to change the Real Estate Settlement Procedures Act, known as RESPA, in response to sharp criticism from industry groups and lawmakers.
“HUD is withdrawing the RESPA rule at this time,” Jackson told reporters during a hastily arranged conference call. “I believe it would be prudent for HUD to reexamine the rule before it is made final.”
The proposed changes to RESPA, a 1974 truth-in-lending act that covers most conventional loans, would have reportedly simplified the homebuying process by requiring more disclosure and limiting excessive settlement charges. This drew fire from industry groups and their allies on Capitol Hill, who voiced concerns that the new rules would hurt small businesses and confuse borrowers.
“Since I was nominated to be acting secretary, the common thread that I have heard from members of Congress, consumers groups and the business community is that they have not had an opportunity to see the changes that HUD has made for nearly two years,” Jackson said. “The most prudent thing to do at this time, from my perspective, was to withdraw the rule and give ample time to refine the rule and repropose the rule and give those persons a chance to evaluate it.”
Industry groups welcomed the decision to pull the proposal, which was under final review at the Office of Management and Budget.
“HUD’s announcement to withdraw the RESPA rule is a win for consumers and the housing industry, which has been a pillar of the U.S. economy,” said Kurt Pfotenhauer, the Mortgage Bankers Association’s senior vice president of government affairs. “MBA and its members want to thank the hundreds of members of Congress who raised appropriate questions to HUD about the unintended consequences of issuing a final rule that would significantly overhaul the way Americans buy homes.”
Jackson would not put a timetable on the reevaluation, but he said that he planned to amend the proposed regulations in response to “valuable comments” from OMB and the Federal Trade Commission, as well as lawmakers and outside groups. He said the decision to yank the proposal at such a late stage in the process had nothing to do with his efforts to get his nomination as HUD secretary through the Senate, where it has been bottled up because of concerns among some lawmakers about the proposed RESPA reforms.
“It is our intent to repropose the rule after we get input,” Jackson told MortgageDaily.com. “The hue and cry has been that they have not had a chance to see the rule for two years and clearly I think that it’s incumbent on us to look at this and take the comments.”
HUD received more than 40,000 comments during the initial review period. The FTC later concluded that one part of the plan, a proposal to disclose the payments to mortgage brokers would confuse borrowers and stymie competition within the industry.
“This is a great day for American consumers, who will now continue to enjoy the choice and protection that they deserve during the home buying process,” said A.W. Pickel III, head of the National Association of Mortgage Brokers. “As the recent Federal Trade Commission study determined, the HUD proposal could have cost consumers $400-$800 million per year.”
Michael Patrick Carney is a Washington, D.C.-based freelance journalist who has worked from Reuters in Jerusalem and North America. He holds a master’s degree from University of Missouri’s School of Journalism and teaches reporting at a Virginia college.email: MichaelPatrickCarney-MortgageDaily@yahoo.com
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