ICBA - News - News Release - ICBA Strongly Opposes Proposed RESPA Rules
ICBA News Release Header


ICBA Strongly Opposes Proposed RESPA Rules

ICBA Strongly Opposes Proposed RESPA Rules
HUD’s Proposal Is Ill-Timed Considering Current Market Environment

Washington, D.C. (June 12, 2008) – The Independent Community Bankers of America (ICBA) strongly opposes revised rules under the Real Estate Settlement and Procedures Act (RESPA) proposed by the Department of Housing and Urban Development (HUD) and urged the housing agency not to move forward with its plan.

“The RESPA proposal would substantially change disclosures and significantly disrupt the already troubled mortgage industry,” said Ann Grochala, ICBA director of lending and accounting policy.  “HUD’s proposal is ill timed, contains elements that will likely confuse borrowers, and adds to the burdens of an already overcomplicated process.  If implemented, it would result in costly system changes, new forms and staff training that would be particularly burdensome for community banks.”

“ICBA has long supported mortgage disclosures that are simple and easy to understand, clearly specifying the obligations and responsibilities of all parties,” ICBA said in a comment letter to HUD. “Disclosures should focus on the information consumers want most: the principal amount of the loan, the simple interest rate on the promissory note, closing costs and the amount of the monthly payment. They should be provided at the appropriate stage of a transaction to allow consumers to make informed decisions and to shop for the best mortgage for their situation.”

“HUD’s proposed changes do not reflect the realities of the mortgage market and industry,” said Karen Thomas, ICBA executive vice president and director of government relations. “They may cause more serious disruption in the current challenging environment, increase the cost of homeownership and divert lender resources at a critical time when lenders and borrowers are endeavoring to work through many challenges.”

ICBA noted that HUD's proposal likely exceeds its authority because, among other things, HUD attempts to limit the amount closing costs can change or prohibit changes, when it is only authorized to ensure consumers receive appropriate and timely disclosures of closing costs. Also, the proposal is inconsistent with the Federal Reserve's recently proposed amendments to Regulation Z, Truth in Lending rules, as well as with existing rules under the Home Ownership and Equity Protection Act, Home Mortgage Disclosure Act, Equal Credit Opportunity Act and Fair Credit Reporting Act.

Read ICBA’s comment letter on RESPA at www.icba.org.