HUD Moves Ahead with RESPA Rule, Sans 'Required Use'

Housing secretary Shaun Donovan has decided to move ahead with a RESPA rule issued by the Bush administration that requires the industry to adopt new standardized mortgage disclosures by next January. However, the Department of Housing and Urban Development is dropping — for now — a "required use" section of the Real Estate Settlement Procedures Act rule that the National Association of Home Builders challenged in court. The RESPA rule issued shortly after the November election bans builders from offering homebuyers discounts or upgrades that are tied to the use of affiliated mortgage and title companies. "We will propose a clearer and more effective 'required use' definition that truly protects borrowers from those who force them to use affiliated businesses," said HUD secretary Shaun Donovan. The House passed a comprehensive mortgage reform bill May 7 that directs HUD to withdraw the RESPA rule and urges the department to work with the Federal Reserve Board in issuing "complimentary" mortgage disclosures. The Fed is working on updating its Truth in Lending Act mortgage disclosures.