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HUD Grinds Brokers: The newest RESPA reform proposal, experts say, keep the worst of what made mortgage brokers oppose a previous attempt.

Article Excerpt
About four years after the Department Of Housing And Urban Development Withdrew A Controversial Real Estate Settlement Procedures Act reform proposal, it has published a new proposed rule, claiming it would provide transparency and clarity in the settlement process and simplify disclosures.

However, according to the Washington law firm K&L Gates, the rule appears to be anything but simple and promises to be as controversial as the previous attempt. Among its many provisions, the rule proposes to transform the good-faith estimate into a four-page document, modify the HUD-1 settlement statement, impose certain tolerances on settlement charges, require a new closing script, and amend certain RESPA definitions, including thing of value and required use. It keeps the requirement brokers disclose their yield-spread premium.

The Mortgage Bankers Association has called for comprehensive simplification and improvement of disclosures to make the mortgage process more transparent.

This requires reform under the Real Estate Settlement Procedures Act to simplify disclosures to consumers, including disclosures from mortgage brokers about whether they are acting as the borrowers agent, said Kieran Quinn, chairman of the MBA.

MBA said it believes that national reforms along these lines, which would pre-empt inconsistent state and local laws, would be far better for consumers than inconsistent regulation.

Marc S. Savitt, president, The Mortgage Center, and president-elect of the National Association of Mortgage Brokers, testified in 2004 and was a...