Will HUD Secretary Jackson's departure stall RESPA reform?
Posted in RESPA reform By Matt Carter, Monday, March 31, 2008.Even before HUD Secretary Alphonso Jackson announced his departure (see Inman News story), K&L Gates attorneys Phillip Schulman and Holly Spencer were expressing their doubts that HUD will be able to see the latest RESPA rule changes through.
"The last time HUD attempted to reform RESPA, it received over 46,000 public comments. We expect HUD will receive a similarly staggering number of comments to this proposed rule, which will take the Department months to read and categorize," Schulman and Spencer said in their recent analysis of the proposed rule.. "By that time, a new President will be elected, and a new Administration will take over at HUD, which could result in wholesale changes to the proposed version of the rule or complete abandonment."
What's your take? Does it matter who's in charge at HUD?
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Submitted by Jillayne Schlicke on April 3, 2008 - 6:12pm.
I think it does matter. Matt, who gets to appoint his replacement?
Submitted by Matt Carter on April 3, 2008 - 6:38pm.
Welcome Jillayne -- I think that's really the question.
Bush appointed Jackson as "acting" head when Mel Martinez decided to run for Senate in 2003, and it was four or five months before he was confirmed by the Senate.
So we may have a situation here where whoever takes over for Jackson in the middle of next month spends the whole time as acting director under a lame duck president.
Then it will be McCain or Obama (or Clinton) who decides who runs the show long term.
I don't know if this is too inside baseball but we're polling people on this question.
The poll is at the bottom of the main page, or click here, or go right to the main poll page and see all the ones we've got going at the moment.
Submitted by Diane Cipa on April 4, 2008 - 6:40am.
As to the comments by Schulman and Spencer, that was then and this is now and the new proposal is different.
HUD, in their defense of the new proposal, demonstrated that they took seriously the concerns expressed in the many thousands of comments they received. They addressed those concerns and frankly, except for the fine tuning and tweaking any new proposal must receive, HUD has created a fair method of disclosure which will benefit consumers.
We are now in a substantially different position because of the mayhem caused by inadequate or incompetent disclosure. HUD'S carrying the ball for the consuming public and the momentum for a fix is unlikely to be stopped by a change in leadership or massive numbers of comments from industry insiders whose motives may or may not have merit.
We're being dragged by the ear by the parental force of regulators back into sensible business practices. We can either say we're sorry and that we'll do a better job or we can moan and whine. I say the proposed rules are something we can live with so why not embrace them and move forward. Remember what Oscar Wilde once said: "If you don't get everything you want, think of the things you don't get that you don't want."
I can think of many more terrible things that could be done to resolve this mess and I'm sure there are lots more that I have even considered.
I'm moving with the bird in the hand that I can see and understand and it ain't so bad.
Submitted by Kathy Glor on April 16, 2008 - 7:10am.
I think everyone will love this!
I attended a continuing education class yesterday that was put on by the local Land Title Association. The information was dated, but I needed the hours. When I mentioned that HUD was looking for input from prople in the field I was told, that the current reform in process will be shelved until the new president is in place. And very well not come off the shelf for quite sometime. Verrry Interestting!
Submitted by Dave Wirsching on April 16, 2008 - 7:15am.
I was at the ALTA Technology Forum earlier this week. While the senior people at the conference didn't come right out and say they were going to fight the proposal, the language they used lead me to believe that they were ready to mount a serious challange to a number of provisions.
Top of the list of objections appears to be the closing script.
Submitted by Diane Cipa on April 16, 2008 - 7:23am.
I certainly expect the usual suspects to use all their resources to stop or challenge the proposal. I hope, for the sake of consumers and the honest folks in the business, that HUD can push it through. We need a better method of disclosure and the proposal, though it needs tweaking, will resolve a numerous problems.
The GFE alone will control predatory and "fast and loose" mortgage brokers. The closing script will at least put some quality into a transaction that has been farmed off the inexperienced notaries. The final HUD comparison to the GFE should go a long way towards killing bait and switch.
Submitted by Dave Wirsching on April 16, 2008 - 7:33am.
In Vegas they were concerned with the costs and time involved in the closing script. Even the SW vendors didn't like it - and they usually love a chance for an upgrade...
I heard over $600 million in annual labor costs for the script alone (I think that was straight from the cost addendum to the proposal). Heard an estimate of additional 45 minutes to settlement (I think that might be a little too high).
Unless someone is going allow providers to recoup that labor cost, those who provide settlement services (like we title agents) are going to have to live with significantly increased costs.
If a closer takes 1 hour to close a loan, and now it takes 1 1/2 hours, then you'll need to have another closer to meet your current volume. If you aren't busy, no big deal. If you are running at capacity, its a major issue. Over an entire industry, that's a massive issue.
Submitted by Diane Cipa on April 16, 2008 - 7:46am.
Unless a closer is doing no talking at all and simply pointing and acquiring signatures, I find this argument ludicrous. Closers make up their own scripts. You have to say something. HUD's script will simply be used in lieu of whatever verbiage the closer now uses. From a mortgage lender and consumer point of view, I say thank heavens, because God knows what some inexperienced closers are saying.
Submitted by Dave Wirsching on April 16, 2008 - 7:51am.
I have to say that I haven't "test driven" the script myself. I think its more than a document run through. My understanding is that there are comparisons and more detailed explainations for loan elements and documents.
Has anyone tried to follow a "script?"
Submitted by Diane Cipa on April 16, 2008 - 8:08am.
I've reviewed it several times and really can't see what everybody's so upset over. I plan to test drive the loan terms portion of it with my closers in real closings. [It wouldn't be fair to do a GFE to HUD comparison because the system and expectations aren't in place.] I want to see how consumers respond before I send my comments to HUD.
Submitted by Matt Carter on April 16, 2008 - 8:23am.
Great discussion on RESPA reform's prospects. Did everyone see Diane's post on RESPRO's April 3 press release, which noted the Mortgage Bankers Association and other industry groups are seeking to extend the public comment period beyond May 13, but that HUD is sticking to its timetable?
Submitted by Dave Wirsching on April 16, 2008 - 8:25am.
I'd be shocked if HUD sticks to its time table. Historically when an Agency loses its leadership, almost all changes and initiatives are shelved until a new "boss" is chosen.
Submitted by Matt Carter on April 16, 2008 - 8:41am.
That seems to have been the case with RESPA reform in 2003 after Martinez left.
Interestingly, Jackson announced his resignation March 31, and the conference where HUD officials said they would stick to their timetable was April 1-3, so it's not like they didn't know he was headed out the door.
Not a huge response to our poll on the question, but those who have weighed in seem to be evenly divided on whether Jackson's departure will stall the process.
Submitted by Diane Cipa on April 16, 2008 - 8:49am.
Reliable highly placed sources say no delay.
Submitted by Dave Wirsching on April 16, 2008 - 9:53am.
Unless they are sitting at 1600 Pennsylvania, I'm not sure they'll know for sure or have control. One phone call from there and its dead.
Submitted by Kathy Glor on April 17, 2008 - 7:12am.
Diane,
You are so right when you say that all closer's use a script. The only difference is that the script is not mandated. There are times in closing when I feel like the guy on the ride at the amusement park, usually when my "script" becomes monotonous. It becomes part of you, its your flow, your groove so to speak. While the script may add time (minimal at best) it has potential to be a great closing tool.
Submitted by Diane Cipa on April 17, 2008 - 7:24am.
I agree Kathy. When I sold real estate, when I originated mortgage loans, anytime I have been in front of a consumer, I use a script of some sort. I adjust it to the situation but there is only so many ways to explain the same thing over and over and over again. That doesn't mean that it can't be meaningful and a personal experience for the consumer.
I'm really excited about starting to test drive this material. We'll be asking each consumer if it was helpful. I should be able to get this going next week.