HUD to seek comment on RESPA's "required use" definitionMortgagePress.comHUD, RESPA, public comment, consumers, mortgage industry, National Association of Home Builders
The U.S. Department of Housing and Urban Development has
announced that it intends to seek further public comment on how it
should define the scope of a prohibited practice called "required
use" under the Real Estate Settlement Procedures Act (RESPA). HUD
will delay the planned implementation of RESPA's required use
provision for 90 days, or until July 16, as it solicits public
comment on whether to withdraw its new definition that would have
taken effect in January.
HUD's rule will inform consumers and the mortgage industry of
its intent to further delay the effective date of the required use
definition and seek additional public comment as a result of a
legal challenge led by the National Association of Home Builders.
New rulemaking would give HUD the opportunity to present for public
consideration a new proposal based upon HUD's reevaluation of the
provision and desire to provide better consumer protections.
Last year, HUD proposed changing this required use definition to
help consumers shop more effectively for homes, mortgages and
settlement services that are best for them, free from the influence
of disingenuous discounts and incentives that steer consumers to
the use of affiliated businesses. HUD's final rule revised the
definition of "required use" to enhance consumer protections
against certain practices conducted by affiliated business
arrangements.
HUD believes that some businesses have used the affiliated
business arrangement exception under Section 8 of RESPA to steer
consumers to affiliated settlement service providers that may not
provide the best mortgage products or settlement services for those
consumers. A number of such complaints concern builders, who are in
a position to refer settlement service business to their affiliated
mortgage and title companies.
For more information, visit www.hud.gov.
