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NAR Files Amicus Brief in Important RESPA Case

(Jan. 14, 2012) The Supreme Court of the United States is hearing a case that will likely resolve a circuit split over section 8(b) of the Real Estate Settlement Procedures Act.

NAR argues in its amicus brief filed with the Court that section 8(b) only applies in circumstances where the fee is shared with a third party, and not where the settlement service provider retains the entire fee. The opposing view holds that RESPA can apply if no services were performed in exchange for the fee.

Courts across the country have split on this question, and so this case should resolve the divide. This issue has great importance to real estate brokers who wish to charge and retain a flat "administrative fee" in addition to a percentage-based commission.

NAR Testimonies

05/22/2008 - NAR Testimony on Impact of Proposed RESPA Rule on Small Business (PDF: 99K)
Written Testimony of Adam D. Cockey, Jr. on behalf of the National Association of REALTORS® Before the House Committee on Small Business titled "RESPA and Its Impact on Small Business"

09/16/2008 - NAR Testimony on Proposed RESPA Rule (PDF: 1M)
Written Testimony of Anthony Lindsey on Behalf of the National Association of REALTORS®, before the House Financial Services Committee, Subcommittee on Oversight and Investigations, on HUD's Proposed RESPA Rule"

NAR Advocacy on 2008 Final Rule

November 17, 2008: HUD published a new final rule “To Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs.” The rule mandates use of a new Good Faith Estimate (GFE) and HUD-1 which go into effect on January 1, 2010.

  • NAR supports HUD’s new RESPA rule which improves transparency in the home buying process by improving consumer disclosures of loan terms and the fees charged by settlement service providers. The final rule incorporates significant changes advocated by NAR to provisions in the proposed rule. The changes included a new coordinated design of the GFE and HUD-1 forms that allow consumers to more easily track changes from the GFE to the HUD-1at the time of closing; elimination of a “closing script” which would have increased the time and cost of closings and which would have come too late in the process to help consumers. In addition, HUD also removed explicit approval for volume discounts which HUD intends to study further.

 September 24, 2008: NAR, a coalition of industry representatives and the Center for Responsible Lending (CRL) met with Susan Dudley, Director of the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) to discuss the Department of Housing and Urban Development’s (HUD) proposed RESPA rule. Attendees strongly urged that HUD coordinate its RESPA settlement cost disclosures with the Federal Reserve Board’s (Board) Truth in Lending (TILA) disclosure reforms in order to benefit consumers, provide clarity and simplification, and reduce costs.

September 16, 2008: NAR testified before the House Financial Services Subcommittee on Oversight and Investigations' hearing on the Housing and Urban Development’s proposed Real Estate Settlement Procedures Act rule. In its testimony, NAR criticized HUD’s proposed RESPA rule for, among other things, a revised four-page Good Faith Estimate that fails to easily match up with the HUD-1 statement and provide clear disclosures, as well as changes that will give competitive advantages to large lenders.

August 18, 2008: United States Representatives Hinojosa and Biggert received a formal response to their August 7, 2008 letter, cosigned by 244 Members of Congress, to HUD Secretary Steven Preston on HUD’s proposed RESPA rule. The Hinojosa/Biggert letter requested that HUD withdraw the proposed rule and focus on joint rulemaking with the Fed on RESPA and TILA disclosures. NAR supported this effort.

August 6, 2008: NAR staff met with majority and minority staff of the House Financial Services Subcommittee on Oversight and Investigations to brief them for an upcoming Congressional hearing on RESPA.

August 5, 2008: NAR staff along with a coalition of industry representatives, met with staff from the Board of Governors of the Federal Reserve System to urge better coordination between the Fed and HUD with regard to TILA and RESPA disclosures. Fed staff reiterated the position it took in its comment letter to HUD on the proposed RESPA rule, telling NAR and industry representatives that further testing and coordination of the two sets of disclosures is needed.

Early August, 2008: NAR launched a successful Call For Action among its Federal Political Coordinators to urge Members of the House of Representatives to sign on to a Congressional letter to HUD Secretary Steven Preston, urging withdrawal of the current proposed RESPA rule. The letter, organized by Representatives Hinojosa and Biggert, accumulated 243 co-signers. NAR supported this Congressional effort by sending 360 distinct, individual letters to the Hill asking members to sign on to the Hinojosa/Biggert letter, followed by phone calls to Members' offices further explaining reasons to sign on to Hinojosa/Biggert letter.

July 24, 2008: NAR met with HUD Secretary Steve Preston and explained that HUD’s proposed RESPA rule contains anti-competitive pricing mechanisms, excessive costs, and complex and confusing disclosures which fail to achieve HUD’s goal of clarity and simplification and urged the Secretary to withdraw HUD’s proposed rule.

July 24, 2008: NAR visited the offices of Texas U.S. Senators Kay Bailey Hutchison and John Cornyn to ask for their support in getting HUD to withdraw its proposed RESPA rule.

June 20, 2008: NAR staff met with OMB officials to discuss HUD’s proposed RESPA rule. NAR explained its opposition to the proposed RESPA rule and proposed a modified approach focused on clear disclosures and a Good Faith Estimate (GFE) formatted to mirror the HUD-1 closing statement. During the meeting, NAR delivered to OMB copies of an economic study prepared for NAR by Dr. Ann Schnare which demonstrates that HUD underestimated the costs of its proposed rule and overestimated its benefits. In addition, NAR provided OMB copies of a joint letter to HUD signed by NAR, the Center for Responsible Lending and the American Land Title Association, urging HUD to adopt a summary GFE accompanied by a full GFE matched to the HUD-1.

June 11, 2008: NAR submitted a RESPA comment letter to HUD on its "Proposed Rule to Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs." The comment letter applauds HUD’s desire to improve disclosures but states that the proposed rule fails to achieve its objectives. The letter states that the proposal (1) fails to strike the right balance between simplification and understanding, (2) contains government –directed price controls that will have anti-competitive consequences and will reduce the quality of settlement services, and (3) underestimates the cost of implementation and overestimates the benefits to the consumer. The comment letter also contains material from an economic study written for NAR by economist Dr. Ann Schnare challenging HUD's economic justification for the proposed rule. NAR has also submitted a joint letter to HUD Secretary Preston, signed by NAR, the Center for Responsible Lending and the American Land Title Association urging HUD to refocus RESPA reform on simplified disclosures.

May 22, 2008: NAR testified at the United States House of Representatives’ Small Business Committee hearing on proposed RESPA rule.

May 7, 2008: HUD announced a 30-day extension, to June 12, 2008, for the public to comment on the proposed RESPA rule. The announcement came just six days before the initial comment period was to end on May 13, 2008 and two days after HUD received a Congressional written request for a 60-day extension signed by 149 members of Congress. The Congressional letter, organized by Rep. Ruben Hinojosa and Rep. Judy Biggert, referred to the extensive nature of the RESPA reform proposal and the fact that some aspects had not previously been the subject of public comment. In addition, the letter stated that further analysis was needed on the proposed rule’s interaction with state and federal laws and regulations including the Federal Reserve Board’s proposal to amend its Truth in Lending Act (TILA) regulations. NAR worked closely with the offices of Representatives Hinojosa and Biggert to help collect signatures for the letter.

April 24, 2008: NAR, along with other settlement service industry representatives participated in a Small Business Roundtable and expressed NAR’s concerns about the proposed rule, including the comprehensive nature of the proposal which goes well beyond the anticipated reform narrowly focused on improved disclosures, the timing of provisions requiring significant changes to the real estate settlement process, and comments directed at specific provisions including volume discounts, average cost pricing, price tolerances, a new definition of “required use” and a new “closing script” which must be read aloud at closings.

March 14, 2008: The Federal Register published HUD’s long-awaited proposed regulation on the Real Estate Settlement Procedure Act. The proposed regulation includes, among other things, a mandatory four-page Good Faith Estimate (GFE) and a modified HUD-1/1A, a required “closing script” that must be read orally at settlement, enhanced disclosures and new rules concerning volume discounts, average cost pricing and a new “required use” definition.

February 7, 2008: HUD sent the long-awaited RESPA reform proposal to Capitol Hill. OMB completed its review of the proposed regulation on Tuesday February 6, 2008 after an almost three month review.

December 14, 2007: NAR representatives meet with Office of Management and Budget (“OMB”) staff in the Old Executive Office Building to present NAR’s views on RESPA reform. The Administration’s OMB received HUD’s new proposed RESPA rule on November 8, 2007.