The National Association of Realtors will reportedly not join a coalition of industry groups that’s lobbying against the creation of a Consumer Financial Protection Agency.

The American Financial Services Association is coordinating opposition to the Obama administration’s call for a consumer agency that would regulate financial products like mortgages and credit cards, Reuters reports.

NAR attended an early brainstorming session, but won’t join the effort to derail the agency’s creation, a spokeswoman told Reuters. NAR believes that if created, the new agency "needs to move cautiously forward in creating its mission," said NAR spokeswoman Mary Trupo.

Nearly 200 labor and consumer organizations have formed their own coalition in support of the plan, and a "direct attack on a key priority for the president makes some trade groups nervous," Reuters said.

Assistant Treasury Secretary for Financial Institutions Michael Barr told members of the American Bankers Association that the administration is determined to move a bill that would create the Consumer Financial Protection Agency through Congress.

As envisioned by the Obama administration, the new agency would have the power to set standards protecting consumers and the authority to ensure that consumer-protection regulations "are written fairly and enforced vigorously."

The agency might develop guidelines for "plan vanilla" mortgages with predictable payments and ban "yield spread premiums," rebates paid by lenders when mortgage brokers place borrowers in high-interest-rate loans.

In a written statement to lawmakers holding a hearing on the topic, AFSA called the idea of the government "dictating which personal finance products and services can — or cannot — be made available" to consumers "troubling."

A draft bill the administration delivered to Congress last week would also require the new agency to develop a uniform mortgage disclosure form and put it forward for public comment within a year of the agency’s creation (see story). …CONTINUED

A new disclosure form could prove to be costly for lenders, who are currently gearing up for Jan. 1 implementation of standardized loan disclosure forms developed by the Department of Housing and Urban Development as part of an overhaul of rules governing enforcement of  the Real Estate Settlement Procedures Act (RESPA).

HUD recently published an impact analysis estimating that lenders and settlement services providers are facing $571 million in one-time costs to begin using the new Good Faith Estimate (GFE) and HUD-1 settlement statement and comply with other RESPA changes. Recurring compliance costs are estimated at $918 million a year.

The Obama administration wants the new Consumer Financial Protection Agency to develop a uniform loan disclosure form that would satisfy both RESPA and Truth in Lending Act (TILA) requirements — something the industry has been pushing for since HUD proposed the new forms.

Secretary of Housing Shaun Donovan is on record as saying that the department is moving ahead on implementing the final RESPA rule and loan disclosures on Jan. 1, even though the forms would presumably be superseded if the new agency is created.

On July 1, AFSA and nine other industry groups wrote Donovan, Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, asking them to suspend implementation of the new RESPA rules.

Legislation aimed at curbing predatory lending approved May 7 in a 300-114 vote in the House of Representatives, HR 1728, includes language that would require HUD to suspend implementation of its RESPA rule changes for one year and work with the Federal Reserve Board on uniform disclosures.

If HR 1728 or the administration’s proposal become law and a combined disclosure is achieved, "these separate proposals will become obsolete and the compliance costs will have been wasted," the groups warned.

The Federal Reserve will soon issue its own rules for loan disclosures provided to consumers under TILA, and "Even if there is neither a suspension of the RESPA rule nor enactment of a new law, successive systems changes to comply with one agency’s rules, and then another’s, will themselves increase costs unnecessarily at a time when neither the industry nor borrowers can afford them," the letter said.


What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription