NAMB to File Lawsuit Over RESPA Rule
For Immediate Release (703) 342-5850
Studies Show Final RESPA Rule will Hurt Consumers and Small Businesses
"HUD has failed to examine properly the Final Rule's impact on small businesses," says
The lawsuit against HUD states that the Final Rule is "arbitrary and capricious," contrary to the intent of Congress, and fails to offer any rational reasons for its rejection of alternative approaches. The Final Rule discriminates against mortgage brokers with the required broker-only disclosure of yield spread premium (YSP), placing them at a permanent disadvantage in the marketplace. HUD has also disregarded numerous federal and private sector studies providing evidence that different origination channels disclosing differently confuses consumers, and will often times cause them to choose a more expensive mortgage product. In a letter to former HUD Secretary Alphonso Jackson, Congress advocated for better transparency in the disclosure of loan information to prevent consumer confusion.
Consumer studies conducted by HUD failed to test both the consumer understanding of loan terms and comparative shopping when originator compensation was not disclosed, and disclosures in transactions involving competing originators.
"Flawed testing methodology prevented HUD from adequately assessing consumer understanding of provisions in the originally Proposed Rule," says Savitt, "Consequently, issuing the Final Rule on flawed and inaccurate conclusions."
"Reform of RESPA is necessary to accomplish a simplified mortgage process," Savitt stated, "But implementing provisions harmful to small businesses and consumers in doing so, is not the answer."
For a copy of NAMB's comment letter submitted to HUD, please click here.
The National Association of Mortgage Brokers is the voice of the mortgage broker industry, representing the interests of mortgage brokers and homebuyers since 1973. The Association is committed to promoting the highest degree of professionalism and ethical standards for its members. In addition to mandating members adhere to a professional code of ethics, NAMB provides mortgage brokers with professional education opportunities, and offers rigorous certification programs to recognize members with the highest levels of professional knowledge and education.