Washington, DC (March 23, 2004) - The American Land Title Association (ALTA), among the earliest of critics of the Department of Housing and Urban Development's (HUD's) Real Estate Settlement Procedures Act (RESPA) regulatory reform efforts, today applauded the department for withdrawing its "final" rule on the subject from further Office of Management and Budget (OMB) review. HUD advised that it would consult with Congress, industry groups and consumers before possibly re-proposing a reform rule. In a letter to the OMB requesting return of the rule, HUD acknowledged that lack of pre-publication consultation was part of its reasoning in this retreat.
HUD's proposed rule contained recommendations for major structural changes in the way residential real estate transactions would be conducted throughout the United States. Those changes included new disclosures of mortgage broker compensation and a settlement services "packaging" proposal that would have vested considerable control of transactions in the hands of lenders.
"We believe there were irreconcilable conflicts between what various industry groups wanted in the reform measure, which made HUD's retrenchment almost inevitable," said James R. Maher, executive vice president of ALTA. "Industry support for the current rulemaking effort, except from the largest lenders, had evaporated in recent months and there was little enthusiasm from most consumer groups as well."
ALTA had long stated its concerns about the impact of the rule on small businesses and consumers, particularly in purchase transactions. The proposed rule had assumed lenders would make service selections that would satisfy consumer needs, and ALTA had often questioned that assumption. Moreover, serious questions were raised by ALTA and others regarding HUD's statutory authority for many proposed reforms.
Congressional intervention by Senator Wayne Allard (R-CO), Representatives Judith Biggert (R-IL) and Ruben Hinojosa (D-TX), together with the tireless efforts of Rep. Donald Manzulo (R-IL), chair of the House Small Business Committee, ultimately helped to encourage HUD's withdrawal. .
HUD Secretary-designate Alphonso Jackson has pledged to continue to pursue RESPA reform with a re-proposed rule after consultation with affected parties.
"Should HUD move forward with any such reform efforts, we hope it will continue to actively seek industry and consumer input," Maher stated.
The American Land Title Association represents the five major title insurance companies and their agencies nationwide on a variety of industry and legislative issues. Members include Fidelity National Title Insurance Company, a subsidiary of Fidelity National Financial (NYSE:FNF); First American Title Insurance Company, a subsidiary of The First American Corporation (NYSE:FAF); LandAmerica Financial Group (NYSE:LFG); Old Republic Title Insurance Group, a subsidiary of Old Republic International (NYSE:ORI); and Stewart Title Company, a subsidiary of Stewart Information Services Corp. (NYSE:STC)