The public will have an additional 30 days to comment on the Bush administration’s proposed changes to the Real Estate Settlement Procedures Act, but HUD officials say they remain committed to finalizing a rule before the president leaves office.
On March 14, the Department of Housing and Urban Development published proposed changes to RESPA — including simplified loan disclosures and incentives for packaging settlement services such as title insurance with loans — which officials said could save consumers $8.35 billion a year (see story).
The comment period, which was set to end May 13, has been extended to June 12 at the request of industry groups and members of Congress. Comments may be submitted on the Internet at the Federal eRulemaking Portal.
"In light of congressional and industry requests to extend the comment period for the rule, and our desire to develop the best possible rule, we are allowing additional time," HUD Deputy Secretary Roy Bernardi said in a statement Tuesday. "However, we remain committed to finalizing a rule before the end of the administration."
Industry groups including the American Land Title Association (ALTA) have raised concerns about the impact of the changes and the potential cost of implementing them.
Representatives Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., drafted a letter to Bernardi asking him to extend the public comment period by 60 days. The letter was co-signed by 146 other members of Congress.
"Given the significance of this law and its regulations, any changes should be thoroughly vetted, especially at this time when our economy is in such a fragile state," Hinojosa and Biggert said in a letter asking fellow lawmakers to join them in petitioning HUD. "We need to ensure that any … updates to RESPA regulations do not negatively impact the home-buying process and exacerbate the current economic slowdown."
The "dear colleague" letter said the request to prolong the public comment period was backed by industry groups including ALTA, the Mortgage Bankers Association, the National Association of Realtors, the American Bankers Association, the Real Estate Services Providers Council Inc., and the National Association of Home Builders.
In 2004, Hinojosa and Biggert drafted a letter that was signed by 226 lawmakers asking the Office of Management and Budget to reject HUD’s previous attempt at RESPA reform, saying a final rule was issued without an opportunity for additional public comment. At the time, HUD proposed even more explicit provisions to allow settlement services to be packaged with mortgage loans.
The National Association of Realtors and many settlement services providers and independent mortgage brokers were opposed to the plan, which they said would give lenders too much control over the selection of settlement services.
HUD eventually shelved the proposal, although a Hinojosa aide said at the time the letter-writing campaign was intended only to convince OMB to send the proposal back to HUD to consider public comments. Those who signed the letter supported aspects of the plan intended to simplify the mortgage application process, the aide said (see story).
Hinojosa issued a statement Tuesday thanking HUD for "accommodating the will of Congress as we collectively work with all stakeholders to make sure the consumer is well served by mortgage disclosures."
Hinojosa noted that the proposed rule changes and HUD’s analysis of it are several hundred pages long, and cover "a number of subjects that are beyond disclosures and have not previously been the subject of public comment."
Adding another 30 days to the comment period "will help all interested parties to provide their views," Hinojosa said, adding that he may ask HUD for another 30 day extension, bringing the total comment period to 120 days.
Although HUD had been on track to propose a final rule in November for implementation in 2009, there’s been speculation that the resignation of HUD Secretary Alphonso Jackson near the end of President Bush’s final term in office could leave RESPA reform in the hands of the next administration.
Extending the public comment period could delay publication of a final rule, but Bernardi said HUD "remains committed to improving the complicated, unclear and costly home-buying process."
Bernardi is serving as acting HUD Secretary until Bush’s nominee to succeed Jackson, Steve Preston, is confirmed by the Senate.
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