Today we end our discussion about RESPA changes.
What sounds like a pretty good idea is being seen by many of the key players in real estate and mortgage lending businesses (i.e., Realtors, title companies, mortgage bankers and mortgage brokers and others) as flawed. Here’s the industry buzz on these changes.
1. According to Ann Schnare’s report to NAR “The Estimated Costs of HUD’s Proposed RESPA Regulations” ( http://www.alta.org/respa/NAR_RESPAreport.pdf) most of any savings achieved through enhanced disclosures will be absorbed by additional costs in the loan process.
2. According to the CEO at The American Land Title Association (ALTA) http://www.alta.org/printtemplate.cfm the requirement to have the closing agent read and interpret a closing script will increase closing costs and will occur too late in the process to help consumers, the proposed GFE is too long and complicated to allow for easy comparison to the HUD-1, and the results of other reforms could enable larger entities to price smaller title companies and settlement providers out of business, which eventually with lead to higher costs. A more complete explanation of ALTA concerns is contained in http://www.alta.org/images/PDF/08-04-14_RESPA_ListofIssues.pdf3. The National Association of Mortgage Brokers (NAMB) sees the reforms as favoring mortgage lenders at the expense of mortgage brokers, by requiring disclosures of fees for services provided by mortgage brokers but for the same services when provided by loan officers employed by the lender. For their talking points see http://capwiz.com/namb/issues/alert/?alertid=11326376 4. The Mortgage Bankers Association (MBA) on the other hand, supports revision of the GFE to explicitly disclose mortgage broker charges and complement the Board’s proposed mortgage broker fee agreement, but they too do not like the proposed GFE or the closing script. See
http://www.mortgagebankers.org/files/News/InternalResource/62680_DavidKittleRESPATestimony.pdf
Are these concerns valid or are they just the normal resistance to change, commonly expressed by people affected by change? That is for HUD to decide. Compared to the proposals in 2002, these have met with much less criticism, so it is likely that some or all may be adopted in one form or another.
Come back next week and I’ll share some ideas you need to know … about succeeding in a down market.