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HUD Suspends New Rule That Would Have Outlawed "Required Use" of A Builder's Affiliated Mortgage Company
 On Friday, March 6th, HUD announced that they were going to further delay implimentation of the new RESPA rule that would have made it illegal for builders to require home buyers to use their affiliated mortgage lenders.  This rule, which was part of a larger RESPA reform, was scheduled to go into effect on January 16, 2009, but was delayed at the last minute until April 16, 2009 because of a lawsuit filed by the National Association of Homebuilders.  HUD has once again suspended the implimentation of this rule until July 16, 2009 because of this ongoing litigation and also because HUD would like to receive additional public comments on this issue. 
 The "required use" debate has been going on for quite some time.  There are several arguments to both sides of the issue. 
Supporters of the "required use" rule offer many reasons why they believe this would be a good law for consumers and competition in general.  Here are some of the arguments that I've heard:
Requiring the use of an affiliated lender amounts to steering and stifles competition, creating a virtual monopoly in some cases. The rates and fees that builders charge are often above market. The incentives are made up either by charging higher ... more

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