The mortgage broker compensation disclosure the Department of Housing and Urban Development proposed in its Real Estate Settlement Procedures Act (RESPA) reform will cause consumer confusion and mistaken loan choices that will increase mortgage costs for many consumers, a study released by the Federal Trade Commission concluded. HUD's July 2002 proposal included a requirement that mortgage brokers must disclose certain types of compensation in a home loan transaction. The FTC study found that these disclosures are likely to confuse consumers, cause a significant number of consumers to choose loans that are more expensive than the available alternatives and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans....
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