WASHINGTON, June 8 - The U.S. Housing and Urban Development Secretary Alphonso Jackson said on Thursday he expected to finalize long-awaited reforms to mortgage settlement regulations by the end of the summer.
Jackson, speaking to reporters after a speech to a home ownership conference, said the reforms would be submitted in a proposed rule that would still be subject to congressional and industry comment.
The action would end a more than two-year hiatus in HUD's efforts to reform regulations under the 1974 Real Estate Settlement Procedures Act, or RESPA, which governs all U.S. home purchases.
Jackson declined to discuss the contents of the proposed rule.
"I think we have taken the input -- the good and the bad -- and we've tried to put it in that rule," he said. "I think the bulk of the industry groups and Congress will be pleased with what we've come out with."
Jackson in March 2004 withdrew a proposal made by his predecessor, Mel Martinez, to launch reforms intended to give buyers more clarity on their actual mortgage settlement costs, which often are criticized as confusing and surprisingly high when consumers get to the closing table.
Americans spend more than $55 billion a year on closing costs and fees that can boost the cost of buying a home by thousands of dollars. Changing the way these fees are determined and disclosed has been a contentious issue for the mortgage and settlement services industry.
Among reforms in the last RESPA proposal, made in 2002, were proposed changes to HUD's good faith estimate settlement cost disclosures, changes to the way lender payments to brokers are recorded and disclosed, and changes to allow mortgages and settlement services to be "bundled" into guaranteed-cost packages
Jackson withdrew the proposal in order to hold a series of round-table discussions with industry group.
Brian Levy, general counsel for Shelter Mortgage Inc. In Milwaukee and president of the Real Estate Services Providers Council, a trade group representing mortgage and services firms such as title insurers, said meaningful changes will still be problematic because stakeholders in the home buying industry have too many diverging interests.
He said changes in industry practices, including guaranteed-cost alternatives to packaging of services, have made the need for reform less urgent.
"The perceived consumer abuses in the marketplace have been largely addressed by predatory lending legislation that wasn't on the radar when RESPA first got targeted for reform," Levy said.
Source: Reuters
