House Financial Services Committee Passes RESPA Home Warranty Bill on Voice Vote
April 2, 2012
On Tuesday, March 27, 2012, The House Financial Services Committee passed HR 2446, The RESPA Home Warranty Clarification Act by a voice vote. The bill, sponsored by Representatives Judy Biggert (R-IL) and Lacy Clay (D-MO) would clarify that home warranties are not a settlement service under RESPA. For nearly two decades HUD allowed real estate professionals to be compensated on a per transaction basis for the work they do in selling warranties. HUD then issued an informal letter in 2008 that contradicted that accepted practice leading to confusion and lawsuits across the nation. HUD compounded the problem by issuing an interpretive rule that led to even more lawsuits. The bill would end the continuing litigation and provide certainty to real estate professionals, home warranty companies, and consumers. The legislation has 36 Republican and Democrat co-sponsors.