MBA: RESPA Reform Could Be Overturned

The Mortgage Bankers Association has warned the Bush administration that its RESPA reform changes could easily be overturned in court and has suggested that it might be better to re-propose the rule for public comment.The MBA commissioned a legal opinion from its outside counsel, who found that HUD is proposing some Real Estate Settlement Procedures Act changes -- such as penalties for inaccurate good-faith estimates -- that Congress rejected in 1976. The legal opinion by attorney John ReVeal of Powell, Goldstein, Fraser & Murphy also questions whether HUD can allow dual packaging in its final RESPA rule without reissuing the rule for another round of comments. The original RESPA proposal, issued in July 2002, did not contain the dual-packaging concept, which would allow title companies and other vendors to compete with lenders in offering settlement services packages. The MBA opposes dual packaging. The association is not threatening a lawsuit, according to MBA vice president Stephen O'Connor. But the legal opinion represents "one more reason" why HUD should re-propose the rule, he said, instead of pushing ahead with a final rule.