Looks like the U.S. Department of Housing and Urban Development (HUD) is delaying the planned implementation of the Real Estate Settlement Procedures Act (RESPA) "required use" regulation for 90 days until July 16, 2009. The “required use” rule stops mortgage companies from steering home buyers to use services of affiliated businesses by offering discounts and incentives. Builders will offer"discounts" on upgrades if you use their lender. 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 ( you think??)exception under Section 8 of RESPA, and that's why the agency sought to revise the “required use” definition under the new rule. Housing and Urban Development 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. This is being delayed in response to a lawsuit filed by the National Association of Home Builders (NAHB) in December of 2008 seeking to overturn the "required use" rule. The hearing is set 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, who sent a letter 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 regulation. All other RESPA provisions remain unchanged and on track for implementation, HUD said.
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