Home / News / Government / HUD Delays RESPA's "Required Use" Rule
Print This Post Print This Post

HUD Delays RESPA's "Required Use" Rule

The U.S. Department of Housing and Urban Development (HUD) said it will delay the planned implementation of the Real Estate Settlement Procedures Act (RESPA) """"required use"":http://www.hud.gov/news/requireduserule.pdf"" regulation for 90 days, until July 16, 2009.
The ""required use"" rule, which would have taken effect in January, prohibits mortgage companies from steering home buyers to use services of affiliated businesses by offering discounts and incentives. According to HUD, the rule was broadened to help protect consumers and allow them to shop for homes, mortgages, and settlement services that are right for them, instead of being unfairly influenced to purchase the services of associated companies.
HUD said it believes some businesses have abused the affiliated business arrangement exception under Section 8 of RESPA, and that's why the agency sought to revise the ""required use"" definition under the new rule. HUD said that a number of complaints of such practices involve builders, who are in a position to refer settlement service business to their affiliated mortgage and title companies.
The delay, in fact, is in response to a lawsuit filed by the ""National Association of Home Builders"":http://www.nahb.org/ (NAHB) in December of last year seeking to rescind the ""required use"" rule. The argument is scheduled to be presented to a U.S. district court judge on April 3rd.
Also calling ""foul"" on HUD's new RESPA rule are eight different banking organizations, led by the ""Mortgage Bankers Association"":http://www.mortgagebankers.org, who sent a ""letter"":http://www.mortgagebankers.org/files/AU/2009/JointLetter_RESPATILA_2-9-2009.pdf to HUD Secretary Shaun Donovan last month, urging him to withdraw the entire RESPA regulation so that disclosure reform could be coordinated with the Federal Reserve's efforts to rewrite the Truth in Lending Act (TILA).
HUD is currently seeking public comments on whether it should withdraw the ""required use"" definition in the ""final RESPA"":http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm regulation. All other RESPA provisions remain unchanged and on track for implementation, HUD said.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

Check Also

Homes Now Appreciating at Rate of 9%

A rise in mortgage rates over the past year and inflationary concerns have constrained the purchasing power of prospective buyers, resulting in home price declines of the past two quarters.