Speaking at the National Press Club in Washington, D.C. today, Department of Housing and Urban Development (HUD) Secretary Mel Martinez announced a proposal that would reform the regulatory requirements under the Real Estate Settlement Procedures Act (RESPA) that govern settlement fees paid by home buyers. The reforms are designed to simplify the settlement process, improve disclosures, and improve consumers' ability to shop for settlement services. Specifically, the proposal seeks to change the manner in which mortgage broker compensation is disclosed, streamline HUD's "Good Faith Estimate" settlement cost disclosure, and allow guaranteed packages or "bundling" of settlement services and mortgage loans to be offered to consumers.
In response to Secretary Martinez's announcement, Federal Trade Commission Chairman Timothy J. Muris stated:
"We are encouraged by HUD's initiative to clarify and simplify the real estate settlement process. The purchase or refinancing of a home is the most important business transaction that many of us will enter into. It is also an extraordinarily complex process, involving lenders, brokers, realtors, title services, settlement agents, appraisers, inspectors, and many other important service providers. We also have seen that this lending and settlement process can provide the opportunity for unscrupulous companies to take advantage of unwary consumers. We therefore support initiatives to make the settlement process more transparent and to foster competition in the market for settlement services. We look forward to working with HUD during the rulemaking process on this initiative to further our common consumer protection goals."
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