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Pro-Teck inspection services expand into New York and New Jersey

National Mortgage Professional
Jan 07, 2009

NAMB to file lawsuit over RESPA rule: Studies show final RESPA rule will hurt consumers and small businessesMortgagePress.comNAMB, RESPA, Baker and Hostetler LLP, Federal Policy Group, Marc Savitt, yield spread premium The National Association of Mortgage Brokers (NAMB) filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD) after it recently issued the Real Estate Settlement Procedures Act (RESPA) Final Rule on Nov. 17, 2008. NAMB, with the support of Baker & Hostetler LLP and the Federal Policy Group, argues that the Final Rule is in violation of law, finalized on a flawed consumer testing methodology, and will have a detrimental impact on small businesses consequently having a negative affect on consumers. "HUD has failed to examine properly the Final Rule's impact on small businesses," says Marc Savitt, NAMB President. "It will put small business mortgage professionals at a significant competitive disadvantage, impeding competition in the mortgage industry and ultimately hurting consumers. What we are looking for is a level playing field for consumers." The lawsuit against HUD states that the Final Rule is "arbitrary and capricious," contrary to the intent of Congress, and fails to offer any rational reasons for its rejection of alternative approaches. The Final Rule discriminates against mortgage brokers with the required broker-only disclosure of yield spread premium (YSP), placing them at a permanent disadvantage in the marketplace. HUD has disregarded numerous federal and private sector studies providing evidence that different origination channels disclosing differently confuses consumers, and will often times cause them to choose a more expensive mortgage product. Consumer studies conducted by HUD failed to test both the consumer understanding of loan terms and comparative shopping when originator compensation was not disclosed, and disclosures in transactions involving competing originators. "Flawed testing methodology prevented HUD from adequately assessing consumer understanding of provisions in the originally Proposed Rule," says Savitt, "Consequently, issuing the Final Rule on flawed and inaccurate conclusions." "Reform of RESPA is necessary to accomplish a simplified mortgage process," Savitt stated, "But implementing provisions harmful to small businesses and consumers in doing so, is not the answer." For a copy of NAMB's comment letter submitted to HUD, click here. For more information, visit www.namb.org.
Published
Jan 07, 2009
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