A “passionate but polite” discussion greeted the unveiling of the Department of Housing and Urban Development’s proposed reforms of the mortgage settlement process at a roundtable meeting Thursday, a HUD spokesman said.

The event, held at the housing agency’s Washington, D.C., headquarters, was the first in a series HUD has planned to collect input from consumers and industry professionals on how to simplify the home-buying process.

It marked the first time representatives from businesses and industry trade groups had a chance to see HUD’s new proposed Mortgage Package Offer and revised Good Faith Estimate forms, among other reforms that were formulated in 2004 but not shared with the industry at the time.

Both of the draft forms can be viewed at HUD’s Web site that focuses on reform of the Real Estate Settlement Procedures Act, known as RESPA.

RESPA governs many aspects of the mortgage settlement process, and HUD is proposing changes to the Act to make the process simpler and easier for consumers to understand. The roundtables are an attempt to get industry input on the changes.

Participants at the forum included industry heavyweights such as the National Association of Realtors, the Mortgage Bankers Association and the American Land Title Association. About 50 people attended, according to HUD Spokesman Brian Sullivan.

The participants expressed strong feelings over the various reforms, Sullivan said. He characterized the discussion as “passionate but polite.”

HUD’s original 2002 proposal would have changed the disclosure requirements for mortgage broker fees, including the yield spread premiums, simplified the good faith estimate form and permitted the sale of guaranteed-price bundled packages of mortgages and mortgage-related services.

These original proposals netted an unprecedented 45,000 comments during the public comment portion in 2002. Many of those came from within the real estate industry in opposition to the changes.

The 2004 proposed rule, formulated in response to the firestorm of comments, has been a mystery ever since. Jackson withdrew the agency’s proposal from the White House Office of Management and Budget in March 2004. Thursday’s meeting was the industry’s first look at the new proposed rules.

During Thursday’s discussion, the original 2002 proposed changes were compared side-by-side with the 2004 proposed changes, Sullivan said.

HUD told the group the Mortgage Package Offer and Good Faith Estimate forms are being tested by consumers, reports said, and that the forms are not necessarily going to be included in the HUD rule.

Regina Lowrie of the Mortgage Bankers Association and Jim Nabors of the National Association of Mortgage Bankers debated the benefits of disclosing yield spread premiums to consumers, accounts said. This element has long been a controversial one, with some asserting that the YSP is confusing to consumers and unfair to brokers.

The American Land Title Association, the title insurance industry’s trade association, during the meeting offered up 11 principles the association believes should guide reform.

One of ALTA’s principles was that market-based approaches be given a chance to work before regulatory directives are imposed. With regard to HUD’s proposed Mortgage Package Order, ALTA pointed out that current market developments such as the Mortgage Rewards and One Fee packages already address this issue.

Sullivan emphasized that the new proposed rules were not set in stone, and that the purpose of the planned roundtables was to get industry input.

“That was then and this is now,” said Sullivan of the 2004 rules. “We’re starting over with a clean slate.”


Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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