Let sleeping bears lie

Representatives Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., want HUD to double the length of the public comment period on its proposed changes to the Real Estate Settlement Procedures Act (RESPA). The 60-day window that closes May 13, they say, provides "an inadequate amount of time for the public to review and comment on such an extensive rule that will have significant implications on the housing industry."

In a "dear colleague" letter asking other members of Congress to support their request to HUD, Hinojosa and Biggert say they want to ensure "that any HUD updates to RESPA regulations do not negatively impact the home buying process and exacerbate the current economic slowdown."

A 60-day delay would increase the likelihood that any changes to RESPA would be left up to the next administration to decide (on the current schedule a final rule could be published this fall for implementation next year).

Hinojosa and Biggert, who teamed up in a similar effort in 2004, say the request to lengthen the public comment period to 120 days is backed by a long list of industry groups, including the Mortgage Bankers Association, the National Association of Realtors, the American Bankers Association , the Real Estate Services Providers Council, Inc., the National Association of Home Builders (NAHB), and the American Land Title Association (ALTA).

ALTA issued an alert urging association members to write their Congressional reps and ask them to sign the letter, saying the more who sign, "the better the chance of getting the comment period extended!!" ALTA also issued a draft statement detailing its problems with HUD's RESPA reform proposal, including the increased time and cost of reading of "closing scripts" and the lack of an itemized list of title fees on the proposed good faith estimate.

Four years ago, Biggert and Hinojosa (pictured here reading to kids at an elementary school in his district) got the ball rolling on a similar procedural issue involving public comments on HUD's last attempt at RESPA reform. Some 226 members of Congress ended up signing a letter asking the Office of Management and Budget to reject HUD's proposed changes, saying HUD had issued a final rule without soliciting additional public comment. HUD eventually shelved the proposal, which involved a controversial plan to allow settlement services to be packaged with mortgage loans.

Back then, a Hinojosa aide said the letter-writing campaign was intended to convince OMB to send the proposal back to HUD so it could be put out for public comment. Those who signed the letter supported efforts to simplify the mortgage application process, the aide said (see Inman News story).

HUD's latest RESPA reform proposal includes incentives designed to encourage packaging of settlement services, but its main focus is on simplifying the good-faith estimate loan originators provide to borrowers. HUD estimates its proposed rule changes would help save consumers $8.35 billion a year, in part by helping consumers make better decisions in comparison shopping for loans and settlement services.

For the complete text of the "dear colleague" letter, and more information on RESPA reform, check out the discussion on the Inman community page.

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