RESPA Reform Is Alive Again

An inside look at HUD's latest proposals for simplifying real estate settlements

Six years after the Department of Housing and Urban Development caused a stir in the real estate industry with proposals to overhaul the Real Estate Settlement Procedures Act, the department is back again with a proposal to simplify real estate closings and promote competition.

This time, HUD officials have offered a scaled-back plan they hope will achieve their original goal.

HUD says its latest proposed changes, published March 14, have the benefit of extensive industry input and consumer testing. But even as HUD opens another comment period that ends May 13, the new plan is spawning its own controversy that could lead to another retreat by regulators.

This three-part report digs deep into what HUD has proposed, how it impacts various industry participants and how it compares with previous failed attempts to push changes through.

Part 1, "Packaging is dead! Long live packaging!" zeros in on HUD's latest proposal and what it means for packaging, the highly debated aspect of HUD's 2002 initiative that drew more than 40,000 comments from industry groups.

Part 2, "Disclose, disclose, disclose," looks closely at HUD's newest RESPA reform proposal's focus on borrower disclosures. HUD proposes simplifying the GFE to make it a better tool for comparison shopping, at the same time preserving consumers' ability to use the document to verify that promised rates and fees jibe with the actual charges presented at closing on the HUD-1 statement.

Part 3, "HUD says packaging, RESPA can coexist," looks at why HUD is not offering safe harbor in its latest reform proposal. Much of the debates over HUD's last attempt to reform RESPA centered on packaging, and this article looks at the history of the argument and examples of companies that have been packaging for some time.

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