Industry Elite Propose Changes to Proposed RuleMortgagePress.comHUD, RESPA, Proposed Rule, NAMB, Mel Martinez,
In what has turned from an intense, nationwide campaign into a
hushed waiting game, the U.S.
Department of Housing and Urban Development closed its Proposed
Rule comment period mailboxes on Oct. 28, to the anxious
anticipation of Mortgage Brokers everywhere. With more than 40,000
letters and postcards stuffing HUD's offices, the mortgage industry
can most definitely be pleased with a job well done, though the
outcome will remain questionable until HUD takes the next step.
Along with individual brokers and brokerages, many mainstream
mortgage corporations and professional trade associations weighed
in their opinions with HUD during the 90-day comment period. In
letters sent to Secretary Mel Martinez, several high-profile
organizations used their clout in an attempt to impede the adoption
of the current Real Estate Settlement Procedures Act proposal, of
which The Mortgage Press has excerpted the most relevant:
The National Association
of Mortgage Brokers
NAMB has had a long history of supporting the reform of the
mortgage laws in our country ... [However] NAMB does not support
the Proposed Rule's characterization of yield spread premiums as a
"lender payment to the borrower," as it will limit consumers'
choices, render Mortgage Brokers unable to compete with lenders,
and fails to meet the definition as contained in [HUD's own]
Statement of Policy 1999-1 and clarified in SOP 2001-1.
As a small business, NAMB cannot support the concept of the
packaging of settlement costs as defined in a regulatory setting.
NAMB believes that packaging will lead to monopolies amongst the
larger lenders, as small Mortgage Brokers and other small
settlement providers will no longer be able to compete for
consumers. The very volatility of the marketplace, especially in
recent times, renders many of HUD's proposals in the Proposed Rule
untenable, at best.
The Mortgage Bankers
Association of America
For numerous reasons, HUD should delay the implementation of the
revised Good Faith Estimate (GFE) proposals. As currently drafted,
these proposals are extremely complex and, in our opinion,
unnecessary in light of the extraordinary pro-consumer reforms
advanced under the Guaranteed Mortgage Packaging (GMP) proposal. We
are, therefore, asking that changes to the GFE be delayed until
after the market has had an opportunity to accommodate the
packaging reforms. After a reasonable period of implementation, HUD
should revisit the need for any additional changes to the current
system.
Countrywide Home
Loans Inc.
Countrywide Home Loans would like to express its strong support for
our professional Mortgage Broker business partners and emphasize
the important part they play in the mortgage lending process. It is
particularly important to recognize the role of Mortgage Brokers in
the context of HUD's proposed RESPA reforms ...
America's Mortgage Brokers play a crucial role in an industry
that is vitally important to consumers and the U.S. economy in
general. It is imperative that careful consideration be given to
any proposal that might have the consequence, unintended though it
may be, of interfering with this most important mortgage
origination channel.
The National
Association of Realtors
As for the GMP proposal, NAR feels that there is not evidence of
consumer and industry benefit to move forward with this more
radical approach to reform, at this time. There are inherent risks
in this proposal, and until more is known about the likely impacts,
HUD should postpone advancing this kind of significant regulatory
change ...
The real issue in the RESPA debate is Section 8, and whether the
problems identified in the mortgage process can be addressed
without removing this very important consumer protection. By
providing Section 8 exemption to the GMP, HUD has created a
powerful regulatory incentive that could move the industry to
packaging with, or without efficiency gains. Most importantly, the
kinds of changes being proposed by HUD should be more fully debated
in Congress before HUD moves forward with any approach to
reform.
Wholesale
Access
What we find particularly disquieting is that, as a consumer, we
still will not get the same GFE disclosure for the same mortgage at
the same interest rate from a loan officer at a bank as from a loan
officer at a mortgage brokerage. This means that we cannot
price-compare, at least not accurately, among different
originators. The proposal fails to close the disclosure gap that
has existed for consumers since November 1992. What sense does this
make?
If implemented, HUD's proposal will create market distortions
that are bad for consumers and brokers alike. Under it, brokers
will always appear to have the higher price, because YSPs are
treated as a credit to the borrower, while service release premiums
(almost the mirror image) aren't disclosed by non-broker
originators. That is like saying, if you pay us a dollar in dimes,
we won't get taxed, but if you pay is in quarters, we will. It is
disparate treatment, is it not?
American Land Title
Association
We believe that the HUD proposed revisions to the RESPA
regulations, particularly the GMP proposal, would have a very
serious adverse effect on small businesses in our industry, and on
their ability to compete for consumer business. Equally important,
we believe that the proposals, if implemented in their present
form, would effectively close the door to future entry into this
industry by small businesses.
The Federal Trade
Commission
HUD's general approach in these proposed changes is to require
brokers and lenders to provide consumers with more information
about the mortgage process, or to provide information in a revised
format. FTC staff believes that this approach will greatly benefit
consumers, but also urges HUD to consider carefully whether the
information disclosed will be useful to consumers, and whether it
is disclosed in an easily understood way. If the additional
information or revised formats confuse consumers, the proposed
changes may not increase consumer welfare as much as HUD intends
and, in the worst case, actually result in consumer harm ...
Finally, the new disclosure applies to only one sector of the
mortgage market-Mortgage Brokers. HUD's Economic Analysis itself
indicates that the mortgage origination market is highly
competitive, including the Mortgage Broker section. It is unclear,
therefore, whether and how the new disclosure would lead to a more
competitive playing field, or why the significant transfer from
brokers to consumers estimated by HUD would occur.
