HUD's effort to reform the Real Estate Settlement Procedures Act (RESPA) has been forgotten for the moment, swept away by the government's massive hurricane-relief efforts. But don't fool yourself into thinking that HUD's will to reform RESPA has evaporated, cautions a RESPA attorney.
When RESPA does resurface, however, HUD's reform proposal will likely be scaled back and be less ambitious than what the department originally sought, predicted Phil Schulman, a partner at the law firm of Kirkpatrick & Lockhart Nicholson Graham LLP, Washington, D.C.
"I don't think we're going to see any RESPA reform for the first quarter of 2006," Schulman told attendees at the Moon Township, Pennsylvania-based Title/Appraisal Vendor Management Association's (TAVMA's) 2005 RESPA & Bundled Services Forum in Washington, D.C., in November. "I think if it's going to happen, it will be in the second quarter of 2006."
For its part, the Mortgage Bankers Association (MBA) is anticipating the possibility of a new proposed rule from HUD in the winter or early spring of 2006, according to Kurt Pfotenhauer, MBA's senior vice president of government affairs.
"I think we may see action in the first quarter. It's a very high priority for [HUD] Secretary [Alphonso Jackson]," said Pfotenhauer. "They are looking to take action sooner rather than later."
Before hurricanes Katrina and Rita shook the political landscape and redirected the government's focus to relief and rebuilding efforts, HUD had been on a roll with its reform initiative following its RESPA roundtables, said Schulman.
The department held seven round-table discussions with the public, consumer advocates and industry leaders as HUD began a new tact on its three-year effort to amend RESPA (see Mortgage Banking, October 2005, p. 16).
Key issues examined included possible changes to HUD's Good-Faith Estimate (GFE) and the mortgage packaging concept to make them more consumer- and industry-friendly; how loan originator compensation should be disclosed on the GFE; whether there should be "cure" opportunities for RESPA violations or errors, as well as the introduction of...