HUD: RESPA Final Rule Withdrawn

Housing and Urban Development Acting Secretary Alphonso Jackson withdrew from consideration the proposed final rule that would have dramatically revised the Real Estate Settlement Procedures Act. Jackson said in his letter to the Office of Management and Budget, who was doing the final review, that he has heard from members of Congress who wanted a full briefing on the proposal before it was finalized. He also heard from consumer and industry groups who had similar concerns.

HUD will reexamine the issue and may send a new proposal for comment before requesting anything be finalized. Jackson does plan to meet with Congress and industry groups as a part of this process. No time frame was mentioned.

The proposed final rule was submitted to OMB on December 16, 2003. While its intent is to increase competition, reduce costs to borrowers and better inform consumers, many in the industry felt it missed the mark and would have disadvantaged smaller lenders and in fact, been more burdensome.

While OMB has not completed its review, it has noted several issues it wanted HUD to address. In particular they believe the new Good Faith Estimate may produce unintended consequences and it may need enhancements. They also believe that preemption and the packaging products requires more review and analysis as well.

The proposed final rule is currently off the table. BankersOnline will keep you updated on any new developments and encourages you to watch for your opportunity to submit comments in the future.

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