WASHINGTON, September 16, 2008
The National Association of Realtors® testified in Congress today on the critical importance of reforming the Real Estate Settlement Procedures Act in a way that truly benefits home buyers by reducing costs, simplifying the closing process, and making closing cost disclosures more consistent and understandable.
“Consumers rely on Realtors® to help them understand the home buying process,” said T. Anthony Lindsey, a Realtor® broker-owner from Charlotte, N.C., who spoke on behalf of NAR. “Our members recognize the need for RESPA reform – they work to protect consumers in the real estate transaction and have seen firsthand the problems and confusion with current procedures.”
NAR has expressed concern over the current U.S. Department of Housing and Urban Development proposal for RESPA reform, which falls short of its stated goal of simplifying the closing process. In addition, HUD’s proposed closing script not only lengthens an already long process but also will ultimately increase closing costs.
“The new four-page Good Faith Estimate (GFE), along with the closing script and other changes, will cause additional confusion, reduce the incentive to shop but raise the prices for settlement services,” Lindsey said. “Replacing a two-page GFE with a four-page GFE is not simplification.”
NAR and the Center for Responsible Lending have recommended that HUD develop a one-page summary GFE to help buyers comparison shop, accompanied by a full GFE that includes all closing costs to reduce confusion. NAR also supports improved disclosures of mortgage terms and settlement services.
“The new GFE, with its price guarantees, volume discounts and price tolerances, is designed to reduce costs, but its provisions will have the unintended consequences of reducing competition in the settlement services industry, favoring large lenders, and ultimately disadvantaging consumers,” said Lindsey.
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